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Holiday Loans: What Are They?

What Are Holiday Loans?
Jason Steele
Jason SteeleUpdated March 2, 2023
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With all the gifts to buy, entertaining to do, and traveling to see relatives, the holidays can be an expensive time of year. If you need extra money to help you cover the costs of the season, you may want to consider a holiday loan. Holiday loans are a type of personal loan that you can use to pay for holiday-related costs, like gifts or travel. You repay the money you borrow over time in fixed monthly payments. Holiday loans are offered by banks, online lenders, and credit unions.Read on to learn more about loans for holidays.

Can You Use a Personal Loan as a Holiday Loan?

A holiday loan is a type of personal loan. Personal loans for holidays can provide quick access to cash, and they typically have lower interest rates than credit cards. In fact, there are at least 10 possible benefits of obtaining a personal loanPersonal loans are also flexible. Covering holiday costs is just one of the ways to use a personal loan.  For instance, these loans can also be used as a consumer loan, which provides a borrower with funding or credit for personal, family, or household expenses. Holiday loans do have some distinctions. Unlike traditional personal loans, holiday loans are only available during the holidays. You can typically get a holiday loan in November or December. Holiday loans may also have lower funding limits than other personal loans. Holiday loan amounts usually range from about $500 to $2,000, although you may be able to borrow as much as $5,000. In addition, the repayment terms for some holiday loans may be shorter than those for traditional personal loans. In some cases, you might only have six months or a year to pay back holiday loans.

Uses of Holiday Loans Beyond Gifts

Purchasing presents is just one of the things you can do with a holiday loan. These loans can cover many other expenses associated with the season, including: 


Whether you’re flying across the country to visit family or taking a holiday vacation, holiday loans can pay for expenses like hotels, airplane tickets, train tickets, and gas.


Groceries are expensive these days, and if you’re cooking big holiday meals, the prices can quickly add up. A holiday loan can help you afford special celebratory meals with family and friends.


If you are hosting guests for the holidays, you’ll need to entertain them. Holiday loans can be used for things like concert tickets and movie tickets. And if you’re throwing a holiday party, a loan for the holiday could help you fund it. 

Things to Consider When Getting a Holiday Loan

Before getting a holiday loan, you should familiarize yourself with the loan terms, fees, interest rates, and collateral. If you are planning to apply for a holiday loan, understanding the requirements to get a personal loanis important. Most lenders base their approval on such factors as the applicant’s credit score, debt-to-income ratio, and proof of income and employment. It’s also important to understand how the loan works, and what the rates, fees, and terms are. Here’s what to look for.

Loan Terms

The term of a loan is the amount of time you have to pay back what you borrowed in monthly payments. Some holiday loans have a term of six to 12 months, while others have longer loan terms. Before getting a holiday loan, it’s a good idea to calculate what the potential payments will be based on your interest rate and loan term. You can lower your monthly payments by increasing the length of the loan, but by doing that, you will end up paying more in interest overall. 

Loan Fees

There are a number of fees that may come with a holiday loan. Some lenders charge origination fees to cover the costs of processing the loan. An origination fee is a percentage of the total amount of the loan — usually about 1% to 5% — and it is often deducted from the loan amount before the money is given to the borrower. Look for a lender that doesn’t charge an origination fee to help save money. Many lenders also charge late fees if you don’t make your loan payments on time. Schedule auto pay, so you don’t forget and miss a payment. Finally, some loans have prepayment penalties, which are fees for paying off the loan ahead of schedule. Check with your lender to find out if there is such a penalty. This information should also be included in the loan terms and conditions, so be sure you read that material carefully.

Interest Rates

A loan’s interest rate is the cost of borrowing the money you take out. Personal loans, including holiday loans, tend to have lower interest rates than credit cards. Typically, the better your credit score is, the lower your interest rate will be. However, each lender has their own method of calculating interest rates, so you should compare lenders to find the best offer for you. If your credit is poor, you may have more trouble getting approved for a personal loan, but it is possible. One option to explore is personal loans for people with bad credit. For instance, having a co-signer on the loan might help you qualify if your credit is poor. 


Most holiday loans are unsecured, which means they don’t require collateral. But if your credit is bad, you may have to get a secured loan and put up collateral to back the loan, in order to get approved. Collateral helps reduce the risk to the lender. Just keep in mind that if you’re unable to repay the loan, the lender can take your collateral to help recoup their loss. 

The Takeaway

A holiday loan may help you through the holidays financially. Holiday loans can be used for any seasonal expense, like travel, gifts, entertainment, or food. However, think carefully about whether it makes sense for you to take on more debt for such a short-term purpose. After all, the holidays will be over quickly, but you may be repaying your loan for a long time. If you do decide to move forward with a holiday loan, the complete guide to personal loans will help you understand how these loans work and give you some pointers. And then be sure to shop around and compare lenders to find the best option for you. Lantern makes the process easy. All you have to do is fill out one quick form, and you’ll get offers from multiple lenders at once. It’s quick and convenient.

Frequently Asked Questions

Are holiday loans a good idea?
What are holiday loans used for?
When can I get a holiday loan?
Photo credit: iStock/solidcolours

About the Author

Jason Steele

Jason Steele

Jason Steele has been writing about credit cards and award travel since 2008. One of the nation's leading experts in this field, he has contributed to dozens of personal finance and travel outlets and has been widely quoted in the mainstream media.
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