Are you borrowing to pay for your dream holiday? Here's the facts...

New research by MoneySuperMarket today reveals that people in Oldham are borrowing more than other locations to pay for their holidays, with those from the town taking out over £2 million in holiday loans since 2016 – that's almost £3,000 on average per person.

A total of £2,931 is the average loan amount for those in Oldham, a town comes 50th in the UK in terms of the locations which take out the highest holiday loans.

The study shows that almost half (48 per cent) of Brits are willing to borrow money in some capacity to go on holiday, with holiday loans now being the third most common way to fund a trip after saved cash and credit cards.

Millennials are most likely to borrow to fund their travels, with over a fifth saying that they would consider a holiday loan.

Two in five millennials who said they would take out a holiday loan would be open to using it to upgrade their hotel, compared to only 12 per cent of those aged 35-plus, while a quarter would use a loan to upgrade to an all-inclusive holiday.

When looking at the length of the loan, 44 per cent of Brits expect to take less than a year to pay off their debt.

This figure rises for millennials, with over half (53 per cent) believing that they’ll be able pay off their holiday loan in less than a year.

In reality, the average term is nearly two-and-a-half years (29.3 months).

When it comes to those in the North West who are considering a holiday loan…

41 per cent would go abroad rather than staycation

21 per cent would upgrade to all-inclusive

18 per cent would extend the length of their stay

13 per cent would go up one or more stars in accommodation

11 per cent would hire a better car

10 per cent would fly business or first class

Those in the North West could be spending up to £1,000 more on their holidays than they initially predicted.

The research found that on average, those in the North West are willing to borrow £2,002 to fund a holiday.

However, the actual average holiday loan amount according to MoneySuperMarket is just over £3,000 – meaning that a large percentage of holidaymakers could be spending more than anticipated.

Kevin Pratt, consumer affairs expert at MoneySuperMarket, said: “Holidays allow us to relax and spend time with loved ones or make new friends, and most of us plan and look forward to them for months.

"It’s hardly surprising that younger people are willing to borrow to ensure they have a fantastic annual break.

“In an ideal world, we’d all be able to pay for our hols out of savings, but that’s unrealistic for most of us.

"Some people put the cost on their credit card but for a significant number, a personal loan is the preferred option.

"This means they can spread the cost over a longer period, making it affordable - but it’s important to remember that any loan is a significant financial commitment.

“When looking for a loan, it is important to shop around, compare rates of interest and any fees or charges, and ensure you understand the terms of payment.

"It’s crucial the loan is affordable.”

For more information, visit MoneySuperMarket’s new “Growing Trend of Holiday Loans” page for more in-depth results around funding the perfect holiday: https://www.moneysupermarket.com/loans/rise-of-holiday-loans/ 

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