The holidays tend to be an expensive time of year. Between purchasing gifts, feeding family and friends, and traveling, it's easy to see how fast spending can get out of control during the holidays. Many people make purchases they can't afford and end up in tough financial situations because of it. If you need money to get through the holiday season, consider taking out a Christmas loan. Whether you want to buy your kids the best presents or travel to see distant family, weigh the pros and cons of Christmas loans to determine your holiday expense options.
What Are Christmas Loans?
Christmas loans are small personal loans that enable borrowers to have extra holiday funds. Whether you want or need more money around the holidays, a loan lets you borrow money for Christmas to cover the cost of food, travel, gifts, and other expenses.
Like other types of personal loans, Christmas loans vary by lender. Your lender will use your income and credit score to determine your eligibility and loan terms. Good credit will help you get better terms and competitive interest rates. Christmas loans can also be secured or unsecured, which determines whether you have to provide collateral for the loan.
Depending on the lender, Christmas loans may allow you to borrow a couple of thousand dollars. Most Christmas loans have short terms, often being repaid before the next holiday season, with low-interest rates. These loans help reduce the stress associated with the holiday season, helping borrowers put the joy back into their festivities rather than worrying about spending.
Benefits of Christmas Loans
Whether you had a difficult year financially or just want some additional spending money to make the holidays extra special, Christmas loans offer several benefits to help you through the holidays. Here are some benefits of using Christmas loans.
Lower Interest Rates
Most people do their holiday shopping with credit cards. However, most credit cards have high interest rates. The longer you let your holiday charges sit with high interest, the more you'll pay in the long run. Christmas loans usually have lower interest rates than most credit cards, allowing you to spend without worrying about the added interest cost. Let's compare the potential costs of Christmas loan interest and credit card interest to give you a better idea of the potential savings.
Let's say your holiday budget is $2,000. If your holiday loan has an interest rate of 3.99%, you'll pay $2,043.50 if you pay it back in 12 months. If you spend $2,000 with a credit card with an 18.34% interest rate, you'll pay $2,204.21 over a 12-month term. This figure can easily be higher if it takes you longer than a year to pay off the charges. The lower interest rates of Christmas loans can help you save money in the long run.
Great Budgeting Tool
Christmas loans can help you stick to a budget. Overspending is easy to do during the holidays, though a personal loan for Christmas can help you identify exactly how much money you want to spend and how much you have left as you spend. For example, only borrow the amount of money you want to spend over the holidays so you have a limit. Then, put the loan funds in a separate account so you're limited to only spending what you borrowed. Keeping the Christmas money separate also helps you easily track how much you've spent so far.
Avoid Racking up Interest
In addition to having lower interest rates than credit cards, Christmas loans have a payoff date and calculated monthly payments to keep you on track to pay off the loan. This system helps you avoid racking up interest and gets your loan paid back quickly. With a credit card, you can take as long as you like to pay off your charges, though the longer you wait, the more interest you have to pay. Without a structured payoff term, you're more likely to accumulate more interest and spend longer paying off the debt.
Allows You to Shop for the Holidays
If you have a low income or are otherwise usually unable to spend money on gifts and other holiday expenses, personal loans for Christmas can give you the ability to shop for the people you love. Everyone wants to give their loved ones the gifts they deserve, and Christmas loans help you pay for them. This can be your opportunity to make the holidays extra special for your friends and family.
Whether you plan your Christmas budget for months or do your shopping last minute, most lenders can get you the funds for a Christmas loan within a couple of business days. Additionally, you can get the funds deposited directly into your bank account so there's no waiting around. Fast funding allows you to start shopping immediately, which is especially beneficial if you're a last-minute shopper.
Things to Consider About Christmas Loans
While Christmas loans offer numerous benefits, there are some potential downsides to consider before you apply for a Christmas loan:
- Can impact your credit: If you miss a payment or make a late payment, your credit score can be negatively affected. To prevent negative blows to your credit score, be sure you can afford the monthly repayment amounts before signing the loan agreement. If you make timely payments, you could actually build your credit score.
- May come with fees: Like any loan, there's a possibility for additional fees. Whether you have costs like prepayment penalties or processing fees will depend on your lender. Keep an eye out for them and ask about hidden fees to avoid getting hit with unexpected charges.
- Your financial situation may worsen: When considering Christmas loans, it's essential to be cautious. Ensure you understand the loan terms and can afford to make the payments. If you cannot repay your loan, your financial situation may worsen, especially if you already have bad credit.
How to Get a Christmas Loan With Atlas Credit
If you have poor credit and are struggling to find funds to cover holiday expenses, consider getting a personal loan for Christmas with Atlas Credit. We offer various loan terms and repayment plans to find an affordable solution for your financial situation. Our application process is simple — apply online, and if you meet our basic requirements, you'll be approved for your loan quickly. Once you verify your information and electronically sign the loan agreement, you'll see the funds in your account the next business day.
To get started, apply for a loan today!