Summer is just around the corner and for most of us, that means dreaming of a family holiday abroad.
Whether you decide to opt for a campsite in Italy or the family-friendly resort in Tenerife, you already know that when you add up the holiday, the flights and all the bits in between for the whole family, it's going to set you back a hefty sum.
If you're thinking about taking out a loan to help you cover the costs there are a few very important questions that you need to consider first and you should definitely check out this
brilliant loan calculator from the Competition and Consumer Protection Commission (
CCPC) too.
The calculator compares the costs of loans and outlines the interest, monthly repayments and total cost of credit from the main lenders so there will be no nasty surprises down the line.
Do I really need to borrow?
Can you postpone your holiday and save up for it instead of getting a loan? As much as we hate to admit it, holidays are not a necessary purchase. In fact, you may save up the money more quickly than you expect because you are motivated for some time in the sun.
Compare the cost of credit
This is the difference between the amount you borrow and the total amount that you have to pay back. The longer you take to pay back the loan, the higher the cost of credit, so try to take out your loan over the shortest possible length of time. The
loan cost comparison on
consumerhelp.ie compares interest and repayments on loans from the main providers so is a good starting point.
Decide between a fixed- or variable-rate loan
Personal loans are more flexible if your interest rate is variable. This is important because your circumstances can change during the loan term and you might want to pay your loan off earlier than planned or reduce repayments for a time if you need to and extend the term. Fixed-rate loans are more restrictive if you want to extend the loan term or make more repayments to save on interest. They do, however, give you certainty that your repayments will stay the same over the loan term. With a fixed-rate loan, you may have to pay extra if you want to pay off your loan early.
Borrow for a reasonable length of time
A loan for a holiday should ideally be paid back before you plan to go on holiday again. Otherwise, you could end up borrowing for your next holiday before you have paid off the loan for the last one.
Save money by finding a loan with the lowest rate and paying your loan back over the shortest term.
Use the interest rate, known as annual percentage rate (APR), to compare loans. The interest offered by different lenders can vary a lot, so look for a good deal. The lower the interest, the lower the cost of the loan, but make sure you are comparing loans of the same term.
Make sure you can afford the repayments
Plan your budget carefully so you don’t overestimate how much you can afford to pay back each month. Check out the
budget planner on
CCPC - it can help you to figure out how repayments will affect your budget, and any changes you may need to make.
More information on the processes involved in taking out a loan, see Consumer Help from the Competition and Consumer Protection Commission. 
