How to budget your holiday using a personal loan
Written by
Thursday 17th July 2025
Dreaming of a getaway? You’re not alone.
Holidays are often the highlight of the year - a chance to unwind, explore new places and make memories. Whether it’s a sun-soaked beach escape or an adventure-packed city break, planning your next trip is exciting.
But there’s a catch: for many UK travellers, the cost of that perfect getaway is now much higher than it used to be.
Why holiday prices have shot up
Recent research shows the average price of an all-inclusive holiday has jumped by 19% in just a year, with Greece up 30%, Spain 21%, and Italy 20%. That means the typical all-inclusive now costs around £1,186 per person, compared to £998 last year.
Meanwhile, BBC figures reveal package holidays overall have risen by 35% in the past two years, with the Canary Islands up 24% and Turkey up 18% year-on-year.
All of this makes smart holiday budgeting more important than ever, and for some, taking out a personal loan to spread the cost could be a practical option.
Work out the true cost of your holiday
Start by listing every single expense. This helps you see exactly how much you’ll need and avoid unpleasant surprises. Be sure to include:
- Flights and accommodation
- Transfers and local transport (trains, taxis, car hire)
- Food and drinks
- Activities and excursions
- Travel insurance
- Shopping and souvenirs
- Airport parking or hotels
Use a spreadsheet or a travel budgeting app to keep track. You’ll quickly see how your dream holiday fits with your finances.
Review your monthly budget
Before considering borrowing, look at your current income and expenses. Ask yourself:
- What’s left over each month?
- Are there existing debts or commitments that could be impacted?
- Could you comfortably manage a new monthly repayment without strain?
Being realistic is key. The last thing you want is to worry about money while enjoying your break - or worse, to struggle once you’re home.
How a personal loan can help spread the cost of your holiday
A personal loan could help you cover the upfront cost of your trip, then pay it off in manageable monthly instalments. It means:
- You can secure deals early or take advantage of last-minute discounts.
- You avoid high credit card interest if you might otherwise carry a balance.
- You have a fixed repayment plan, making it easier to budget.
Just be sure to compare rates and understand the total cost of borrowing.
Use online loan calculators to see how different loan amounts and terms would fit your budget.
Factor loan repayments into your spending plan
If a personal loan is the right choice, work repayments into your monthly budget before you book.
For example, if a loan means paying back £150 a month over two years, look for ways to adjust your spending - perhaps fewer takeaways or reviewing streaming subscriptions - to accommodate it.
This helps you avoid any stress once you’re back from holiday and ensures you can continue paying.
Plan for the unexpected
Set aside a little extra for emergencies or spontaneous fun.
Travel plans can change, and it’s always smart to have a small buffer to avoid reaching for credit cards if something comes up.
Enjoy your trip - then stay on top of repayments
Because you’ve budgeted carefully, you can truly relax and make the most of your holiday.
Once you’re home, continue making repayments on time. This protects your credit score and gives you the confidence to plan future adventures without financial setbacks.
The bottom line: careful budgeting makes your holiday dreams possible
With holiday prices climbing across Europe, and package deals up by over 35% in just two years, planning ahead has never been more crucial.
By understanding the total cost, reviewing your budget, and considering options like a personal loan to spread the cost of your holiday, you can enjoy your dream getaway without long-term financial strain.
Frequently asked questions about holiday loans
- Is it a good idea to use a personal loan for a holiday?
It can be, provided you’ve carefully budgeted. A personal loan allows you to spread the cost of your holiday over fixed monthly payments, which can be easier to manage than paying for everything upfront or relying on high-interest credit cards. Just be sure to compare interest rates and only borrow what you can comfortably afford to repay. - How do I budget for a holiday when prices keep going up?
Start by working out the total cost of your trip - including flights, accommodation, food, activities, insurance and spending money. With average package holiday prices up by 35% in two years, it’s more important than ever to get a realistic picture. Then review your monthly income and outgoings to see what you can afford, and consider options like a personal loan to help spread the cost. - What are the benefits of using a personal loan instead of a credit card for travel?
A personal loan usually comes with a fixed interest rate and fixed repayment schedule, which can be easier to plan around. In contrast, if you only pay the minimum on a credit card, interest can build quickly, making your holiday far more expensive over time. A personal loan can help you avoid that and stick to a clear budget. - How much extra should I budget for emergencies on holiday?
A good rule of thumb is to add at least 10% on top of your estimated holiday costs for unexpected expenses - whether it’s a medical bill, last-minute taxi or an activity you decide to splurge on. Having this buffer means you’re less likely to rely on credit cards or go over budget. - Will taking out a personal loan for a holiday affect my credit score?
A personal loan will appear on your credit file. If you make repayments on time, it could even help improve your credit score by showing lenders you can handle borrowing responsibly. However, missing payments or taking on too much debt can damage your score, so it’s vital to borrow within your means.
Ready to explore your options?
Find out how a personal loan could help you make your next holiday a reality.
Written by
Anna Stacey is a skilled content writer based in Lincolnshire, specialising in the financial services industry. With over four years of experience in the digital landscape, she has an aptitude for crafting informative and engaging content that addresses a range of customer needs. Spanning diverse topics, from finance and lending to broader digital marketing trends, Anna is committed to delivering customer-centric content that not only educates but also empowers readers to make informed decisions.
