Holiday Loans vs Conventional Loans

Holiday loans are different from conventional loans in several ways. Although both holiday loans and conventional loans can be secured with collateral other than property and neither are insured by government agencies, the differences between the two types of loans include the purpose, length of terms, and loan amounts. Here are some of the differences between these two types:

Holiday loans are given in smaller amounts than conventional loans. Holiday loans can be as small as one or two thousand dollars and as large as ten to twenty thousand dollars. Conventional loans can be as large as a million dollars (though normally a few hundred thousand dollars).

The purpose of holiday loans is to fund vacations, celebrations and holidays. A Christmas loan or a loan for a honeymoon would be considered a holiday loan. Conventional loans, also called a conventional mortgage, may be used to purchase a home.

Holiday loans are short term, lasting for several months or a couple of years. Conventional loans are amortized over 10, 15, 20, or 30 years, because of the large amount due.

Interest rates are typically lower for conventional loans. The rates are normally between 4% and 6%, depending on your credit history and other factors. The interest rates on holiday loans are 7% to 8% regularly.

It is easier to get approved for a holiday loan than a conventional loan because the loans are in lower amounts, making them easier to pay off. Since these loans are short term, there is also less opportunity for default, which can make this type of loan more attractive for a lender to offer.

Conventional loans require a strong credit history. Holiday loans can be obtained without a strong credit history, but collateral and a cosigner can improve the chances that a loan application will be approved and that lower interest rates will be offered.

Loans that are used for a vacation or a special occasion tend to cover the full amount of the trip or event, as opposed to a conventional mortgage, which only covers 80% to 90% of the appraised value of a property.

Down payments are often required for conventional loans, while holiday loans require no money down.

With a conventional loan, the borrower is sometimes required to be purchase insurance. This is not the case with holiday loans.

Need Cash Now? Get a Cash Advance