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Paying for Christmas gifts and other holiday-related costs such as food or travel can be expensive, especially if you’re working fewer hours or struggling with high inflation rates. About 28% of consumers plan to spend less this holiday season, according to a Gartner Marketing survey.
To help shoppers out, many retailers (like Amazon and Target) are offering “holiday deals” early this year. If you need help covering holiday expenses, a Christmas loan might also come in handy.
If you need help covering holiday expenses, taking out a Christmas loan might be a good option.
Here’s what you should know about Christmas loans:
- What is a Christmas loan?
- How to qualify for a holiday loan
- Pros of getting a Christmas loan
- Cons of getting a Christmas loan
- How to get a Christmas loan
- Watch out for predatory loans
- Tips for a debt-free holiday season
What is a Christmas loan?
You might see some lenders advertise special “Christmas loans” — but these are usually just personal loans that you can use for holiday expenses. Here are several important points to keep in mind if you’re considering a personal loan for Christmas:
- Interest rates: The rate you get on a personal loan will depend on the lender as well as other factors, such as your credit score and the repayment term you choose. Average personal loan interest rates generally range from 4.99% to 36%.
- Repayment terms: You’ll typically have one to seven years to repay a personal loan, depending on the lender. While longer terms can provide lower monthly payments, it’s usually a good idea to choose the shortest term you can afford to keep your interest costs as low as possible. Many lenders also offer lower rates to borrowers who opt for shorter terms.
- Fees: Some lenders charge fees on personal loans, such as origination or late fees. These can increase your overall loan cost. Keep in mind that if you take out a loan with one of Credible’s partner lenders, you won’t have to worry about prepayment penalties.
- Time to fund: If you’re approved for a personal loan, you can generally expect to get your fund in about one week, depending on the lender. Some lenders can fund loans as soon as the same or next business day after approval — which could be helpful if you need the money quickly for Christmas.
If you decide to take out a Christmas loan, it’s important to shop around and consider as many lenders as possible. This way, you can find the right loan for your needs.
Credible makes this easy — you can compare your prequalified rates from our partner lenders in the table below in just two minutes.
|Lender||Fixed rates||Loan amounts||Min. credit score||Loan terms (years)|
|9.95% - 35.99% APR||$2,000 to $35,000**||550||2, 3, 4, 5*|
|7.99% - 15.19% APR||$10,000 to $50,000||700||3, 4, 5, 6|
|8.99% - 35.99% APR||$5,000 to $35,000||600||2, 3, 4, 5|
|6.99% - 24.99% APR||$2,500 to $35,000||660||3, 4, 5, 6, 7|
|7.99% - 29.99% APR||$10,000 to $50,000||Not disclosed by lender||2, 3, 4, 5|
|7.99% - 29.99% APR||$5,000 to $40,000||600||2, 3, 4, 5|
|8.3% - 36.0% APR||$1,000 to $40,000||600||3, 5|
|7.99% - 35.99% APR||$2,000 to $36,500||580||2, 3, 4, 5, 6|
|5.99% - 22.49% APR||$5,000 to $100,000||660||2, 3, 4, 5, 6, 7
(up to 12 years for home improvement loans)
|6.99% - 24.99% APR1||$3,500 to $40,0002||660|
(TransUnion FICO®️ Score 9)
|3, 4, 5, 6, 7|
|18.0% - 35.99% APR||$1,500 to $20,000||None||2, 3, 4, 5|
|7.74% - 17.99% APR||$600 to $50,000 |
(depending on loan term)
|660||1, 2, 3, 4, 5|
|6.99% - 35.99% APR||$2,000 to $50,000||640||2, 3, 4, 5|
|7.99% - 23.43% APR10||$5,000 to $100,000||Does not disclose||2, 3, 4, 5, 6, 7|
|11.69% - 35.93% APR7||$1,000 to $50,000||560||3 to 5 years 8|
|7.96% - 35.97% APR||$1,000 to $50,000||560||2, 3, 5, 6|
|5.4% - 35.99% APR4||$1,000 to $50,0005||580||3 to 5 years4|
Christmas loans for bad credit
You’ll generally need good to excellent credit to qualify for a personal loan — a good credit score is usually considered to be 700 or higher. Several lenders offer personal loans for bad credit, but these loans usually come with higher interest rates compared to good credit loans.
If you’re struggling to get approved for a Christmas loan, here are a couple options to consider:
- Take out a secured personal loan. While most personal loans are unsecured, some lenders offer secured personal loans that require collateral. Because these loans are less risky for the lender, you might have an easier time qualifying if you have poor or fair credit.
- Apply with a cosigner. You might also consider applying with a cosigner with good credit, which could improve your approval odds. Not all lenders allow cosigners on personal loans, but some do. Even if you don’t need a cosigner to qualify, having one could get you a lower interest rate than you’d get on your own.
How to qualify for a holiday loan
While eligibility criteria for a personal loan can vary by lender, you’ll likely come across a few common requirements, including:
- Good credit: You’ll generally need good to excellent credit to qualify for a personal loan. If you have poor or fair credit, having a cosigner with good credit could improve your chances of approval.
- Verifiable income: Some personal loan lenders have a minimum income requirement while others don’t — but in either case, you’ll likely need to provide proof of income to show that you can repay the loan.
- Low debt-to-income ratio: Your debt-to-income (DTI) ratio is the amount you owe in monthly debt payments compared to your income. To get approved for a personal loan, your DTI ratio shouldn’t be higher than 40% — though some lenders might require a lower ratio than this.
In most cases, you can apply for a holiday loan online within minutes, from the comfort of your home. Most lenders will ask you to provide basic personal and financial information, such as your phone number, address, Social Security number, income, and monthly rent or mortgage payment.
You might also have to submit documents that verify your identity and income, such as a copy of your driver’s license or passport, recent pay stubs, or tax forms. Once you submit your application, lenders will likely perform a hard credit check to help determine whether to approve you.
Check Out: Credit Card Consolidation Loans
Pros of getting a Christmas loan
Christmas loans offer a few potential benefits, including:
- No need for collateral: A Christmas loan is typically unsecured. This means you don’t need to risk losing collateral or an asset you own, like your house or car.
- Flexible: You can use a Christmas loan to cover just about any holiday expense, including gifts, food, decorations, and travel.
- Chance to improve your credit: Most lenders report your payment history to the three major credit bureaus. As long as you make your payments on time, every time, a holiday loan might increase your credit score.
- Can pay off your loan early: If you’d like to pay off your holiday loan early to save on interest, there’s a good chance you can. Many lenders don’t charge prepayment penalties.
Cons of getting a Christmas loan
Christmas loans also have some possible drawbacks to keep in mind, such as:
- Fewer options for bad credit: If you have poor or fair credit, it could be harder to get approved for a personal loan.
- Increased debt: Getting a personal loan means you’ll have another payment to manage on top of any other debts you might have. If you’re already stretched financially thin, taking on another loan might not be a good idea.
- No rewards or perks: Unlike many credit cards, personal loans don’t offer any rewards or perks.
If you decide to get a personal loan, remember to consider as many lenders as you can to find the right loan for your situation. This is easy with Credible: You can compare your prequalified rates in two minutes — without affecting your credit.
How to get a Christmas loan
If you’re interested in applying for a Christmas loan, follow these six steps:
- Check your credit. Check your credit for free on AnnualCreditReport.com or another website that offers free credit reporting. This can help you understand what types of holiday loans you might qualify for.
- Compare lender rates and options. Not all holiday loans are created equal. It’s a good idea to prequalify and compare offers from at least a few different lenders. Doing so won’t affect your credit score.
- Estimate loan costs. To make sure you can afford a holiday loan, do some math and estimate what you’ll pay for it. A personal loan calculator, which will ask you for the amount you want to borrow, your interest rate, and repayment term, can make this easier.
- Review your monthly budget. Take a close look at your monthly budget. Figure out if you can make your loan payments while covering other expenses, like your rent or mortgage, utilities, and groceries.
- Fill out and submit an application. Apply for the holiday loan in person or online on the lender’s website. To avoid delays, double check your application for errors and inaccuracies before you submit it.
- Get your funds. Most lenders will distribute your money quickly. Depending on the lender, you can receive it as soon as the same day you get approved, the next day, or within a few days.
Watch out for predatory loans
If you need a small, short-term personal loan for Christmas, it’s critical to make sure you’re working with a vetted lender that provides reasonable rates and terms. This is especially true if you have poor or fair credit since predatory lenders and scammers often target borrowers with bad credit who are desperate for a loan.
You should avoid these types of loans whenever possible:
- Payday loans: While these short-term loans generally don’t require a credit check, they can come with astronomical rates and fees — sometimes as high as 300% to 500% APR. If you can’t quickly repay a payday loan, you could get stuck in a revolving debt cycle that could be hard to escape.
- Pawn shop loans: These loans are offered by pawn shops and require you to provide an item of value as collateral. If you don’t pay off the loan, the pawn shop can sell your item. Like payday loans, pawn shop loans can also come with extremely high rates and fees.
- Car title loans: With this type of loan, you’ll give the lender the title of your car (or motorcycle). You’ll typically have to repay a car title loan within a short amount of time — usually 30 days or less. If you fall behind on your payments, the lender could seize your vehicle.
If you’re looking for a personal loan, here are a few personal loan scam warning signs to watch out for:
- Using high-pressure sales tactics
- Not requiring a credit check
- Approaching you about the loan out of the blue
- Not having a physical address
Go with your gut — if something feels off about a lender, it probably is. Also keep in mind that if you compare your options with Credible, you’ll be working with vetted, trustworthy lenders.
Tips for a debt-free holiday season
While taking out a Christmas loan could help you cover last-minute holiday expenses, here are a few other strategies that could also help you avoid holiday stress:
- Set a budget. Creating a budget based on your income is a great way to determine what you can actually afford to spend for Christmas.
- Look for deals. Scour the internet and your local shops for deals on what you’re looking for to lower your overall costs. For example, consider taking advantage of savings offered on Black Friday, Cyber Monday, and other shopping holidays.
- Stick to the basics. It’s easy to get caught up in the moment and buy what you want (or what someone else wants). But try to be firm whenever you can or compromise when necessary. For example, you might buy a couple of small, practical gifts for those on your list instead of a big expensive gift for each person.
- Shop for gifts year-round. You don’t have to wait until November and December to do your holiday shopping. If you shop throughout the year when prices are low and certain items go on sale, you can save big.
- Book holiday travel early. Airfare and lodging can be especially expensive if you book at the last minute. By paying for your holiday travel early on, you may score great deals.
- Start a savings account. At the beginning of the year, open a savings account specifically for holiday expenses. You can contribute a bit of money from each paycheck until you’ve met your savings goal.
If getting a Christmas loan seems like the right fit for you, remember to consider as many lenders as you can to find the best loan for your needs. Additionally, be sure to think about the overall cost of the loan before you borrow — this way, you can be prepared for any added expenses.
You can estimate how much you’ll pay for a loan using our personal loan calculator below.
Enter your loan information to calculate how much you could pay
With a $ loan, you will pay $ monthly and a total of $ in interest over the life of your loan. You will pay a total of $ over the life of the loan.
About Rates and Terms: Rates for personal loans provided by lenders on the Credible platform range between 5.40%-35.99% APR with terms from 12 to 84 months. Rates presented include lender discounts for enrolling in autopay and loyalty programs, where applicable. Actual rates may be different from the rates advertised and/or shown and will be based on the lender’s eligibility criteria, which include factors such as credit score, loan amount, loan term, credit usage and history, and vary based on loan purpose. The lowest rates available typically require excellent credit, and for some lenders, may be reserved for specific loan purposes and/or shorter loan terms. The origination fee charged by the lenders on our platform ranges from 0% to 10%. Each lender has their own qualification criteria with respect to their autopay and loyalty discounts (e.g., some lenders require the borrower to elect autopay prior to loan funding in order to qualify for the autopay discount). All rates are determined by the lender and must be agreed upon between the borrower and the borrower’s chosen lender. For a loan of $10,000 with a three year repayment period, an interest rate of 7.99%, a $350 origination fee and an APR of 11.51%, the borrower will receive $9,650 at the time of loan funding and will make 36 monthly payments of $313.32. Assuming all on-time payments, and full performance of all terms and conditions of the loan contract and any discount programs enrolled in included in the APR/interest rate throughout the life of the loan, the borrower will pay a total of $11,279.43. As of March 12, 2019, none of the lenders on our platform require a down payment nor do they charge any prepayment penalties.