I want to finance my vacations: better with the agency or with the bank?

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You’ve been waiting all year for this moment, you’ve looked at destinations and you’ve finally decided where you want to go on vacation. There is only one small ‘but’, your dream trip is out of budget. What can you do? At that point is where the option of pay the holidays in installments and the different ways to do it. And with them, the doubt Is it better to finance the trip with the agency or ask for a loan from the bank?

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How to finance a trip and pay it in installments

There are three ways to pay for a trip in installments:

Finance travel agency Finance the trip with the travel agency

Today many large agencies offer loans to pay for the vacations you hire with them, although not for all your trips. The more expensive the destination, the more options you will have of having the option to finance it.

Bank travel loan Finance the trip with a bank loan

This is the most versatile option to pay for your trip in installments, as you have more flexibility to choose the amount to finance, the payment terms …

Finance travel card Finance it with your credit card

This is the simplest option. However, just because it is easy does not mean that it is the best option. On the one hand, the amount you can finance will depend on the card limit. On the other hand, if you choose to pay it in several months and not at the end of the month, it is a more expensive form of financing than the other two alternatives.

What types of trips can be financed

With a personal loan you can finance any trip, while the options with travel agencies are more limited.

The trips that agencies usually finance include end-of-term trips, study trips, honeymoons, and cruises and other organized trips. In addition, there are also some online agencies that allow you to finance travel packages that include the hotel and the flight.

And the flights? Can flights be paid in installments? For now airlines do not allow deferral of payment on flights. If you want to finance the flight, you will have to do it as part of a package with the hotel.

Where can I finance a trip? Bank vs agency

When financing a trip, what are the advantages and disadvantages of doing it with the bank or with the agency?

Finance with the agency

Loan at a bank

Amount to finance Financing is limited to the cost of the package you hire You can finance the entire trip, not just the package offered by the agency
Term Deadlines are usually shorter You can choose to repay the loan in a longer term
Type of interest Sometimes they allow deferred payment without interest, although they may have associated commissions Generally, interest rates and fees are lower
Early repayment An early repayment is not normally allowed or the commission is higher You can make a partial or total amortization whenever you want
Ease of opening It is comfortable, since in a single step you hire and finance your vacations Sometimes, it may be necessary to contract other products from the bank, such as opening an account
Access to information As the agency is an intermediary, it is more difficult to access your loan information, such as terms and outstanding capital You can easily access the information about your loan, such as the term and outstanding capital
Beware of interest-free financing
Interest-free financing is one of the great claims of travel agencies. Its appeal is undoubted, but before signing you must stop to look at the conditions.

That the interest on a loan is 0% does not mean that you will not pay more for that trip. The trick is in the interest rate to which the offer refers, that is, the difference between TIN and APR.

In summary, the TIN collects the interest rate of the loan and the APR adds to that rate the commissions and other expenses. Therefore, when they offer you interest-free financing, always ask what the APR of the loan is.

As an example, a loan with a TIN of 0% may end up being more expensive than one with a TIN of 5% when you add up the rest of the expenses and commissions.

Agency financing Personal loan
Amount 3000 € 3000 €
Term 12 months 12 months
TIN 0% 5 %
Opening commission € 100 0%
Payment protection insurance 1 % 0%
APR 8.48% 5.11%
Total € 3130 € 3,081.87

Finally, when deciding whether finance the holidays with the agency or ask for a loan from the bankIt is also necessary to consider that it is possible that the price of the trip is more expensive in those agencies that finance it. In this way, even if the loan has good conditions, if you can get the same cheaper package elsewhere and ask for a loan from your bank to finance it, you are likely to save money.

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