Whatever the reason for the holiday loan, it seems many British holidaymakers underestimate how long their debt will take to pay off.
When asked, 44 per cent of Brits say they’d expect a holiday loan to take under a year to pay off – perhaps thinking they would be able to repeat the process the following year for the next trip abroad with two loans overlapping.
However, our data suggests Brits actually choose repayment periods that are more than twice what they thought they would be. The average selected term for a holiday loan is around 30 months, perhaps indicating a willingness to take on a larger financial commitment than they first expected in order to get their desired holiday.
Parents borrowing the beach
With regard to the types of Brits taking out holiday loans, our research shows that parents are one of the best-represented groups.
Parents are three times as likely to take out a holiday loan and are willing to borrow up to four times as much as non-parents, according to our survey of 2,000 Brits. The average parent will borrow a maximum of £2,131 for a holiday - £595 more than Brits without children.
When asked what is the most they would spend per person on a family holiday, it was discovered that parents with two children reportedly spend £240 more than parents with just one.
With that in mind, parents with two children should be prepared to spend up to £4,500 in total for a typical holiday – just under £2,000 more than parents with one child.
If parents were tempted to turn to a holiday loan to cover the costs, our research showed that they are three times more likely than non-parents to use that money to upgrade to business or first class when flying on non-budget airlines. Parents clearly feel they deserve that extra touch of luxury.
Switching our sights over to how men and women approach holiday loans, it’s clear that women are much more likely to splash out on a holiday when kids aren’t invited. Per person, women will reportedly spend over £160 more than they would if kids under 18 were also part of the break. Men, on the other hand, will always spend more per person on holidays.
When looking at our customer data, the average difference in loan amount between genders is a cool £50 million. Men were found to request loans amounting to over 50% more than women - £153 million versus £100 million.
Youth embracing loans as well as credit cards?
Digging into the MoneySuperMarket data shows that those aged between 25-34 are most frequently looking to take out a holiday loan.
That age group has also borrowed the highest total amount since 2016 according to our data – just under £88 million, or roughly a third of the combined British total.
While 25 to 34 year-olds are the age group that is most frequently engaging with holiday loans, our data reveals that 21-year-olds specifically have the highest number of “click outs” for holiday loans. Click outs being the point where the user leaves MoneySuperMarket to go to the lender’s site to complete the process. However, the fact that 18-24 year-olds as a group are borrowing less than older cohorts suggests each individual loan is for a lower amount.
Over a fifth of 25 to 34 year-olds suggested that they would consider a holiday loan – meaning they are 3.5 times more open to the idea than 45 to 54 year-olds.
While those in their middle age might be more cautious about taking out a holiday loan, that caution is somewhat thrown to the wind for those around retirement age. Not counting extreme examples with relatively few clicks, we found that 69 year-olds have the highest average loan amount– over £4,500 per loan.
The holiday loan capital of the UK
According to our survey, Londoners are found to take the most holidays per year (2.1, to be precise). This is in stark contrast to the Welsh who take the fewest (1.2 per year). Those from London are also more taken with the fancier elements of a holiday – 30% of them would use a loan to upgrade to a hotel with an infinity pool, roughly three times the typical Brit.
Perhaps surprisingly, the UK’s capital is not the holiday loan capital of the UK, according to our data. That honour goes to Birmingham, followed by Belfast and Glasgow.
It should be noted that, given the size of the London and the number of people from the there who use MoneySuperMarket, our data splits London as a whole into it’s distinct parts, ones that have their own socio-economic differences. If counted in totality, London would have a total of £24.2 million.
Jersey in the Channel Islands has the highest average loan amount of any location in the UK, at over £4,300.
Know what’s right for you
Regardless of how many holidays you might go on each year, they’re valuable periods of time for us to relax, recharge and perhaps spend time with loved ones.
If possible, it can be attractive to pay for these holidays with your personal savings, but a loan will be necessary in many cases, especially to fund special occasions such as honeymoons and more ambitious summer holidays.
When looking for a loan, it is important to shop around, compare rates of interest and any potential charges, and ensure you understand the terms of payment.
MoneySuperMarket has an Eligibility Checker that allows you to run a ‘soft’ search for loans for which you are likely to be approved without doing any damage to your credit score.
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