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What you need to know about Christmas loans

Our goal at Credible Operations, Inc., NMLS Number 1681276, hereafter referred to as “Credible”, is to give you the tools and confidence you need to improve your finances. Although we promote the products of our partner lenders who pay us for our services, all opinions are our own.

Here’s what you need to know about Christmas loans. Learn more about the pros and cons. (Shutterstock)

Paying for Christmas gifts and other holiday-related expenses like food, decorations, and travel can be expensive. This is why many people are looking for Christmas loans. These loans can make it easier to cover those expenses so you can take full advantage of the holiday season.

Here’s everything you need to know about Christmas loans.

If you’re looking for a Christmas loan, Credible lets you view your prequalified personal loan rates from various lenders, all in one place.

What are Christmas loans?

Christmas loans are personal loans you can use for a variety of vacation expenses. Just like other types of personal loans, a Christmas loan can be secured or unsecured. Factors such as your credit score, income, and the lender you choose will determine your terms and eligibility. You’ll need good credit to get the lowest rates and best terms.

How does a Christmas loan work?

With a Christmas loan, you’ll receive a lump sum of money up front and pay it back over time, usually in fixed monthly installments.

Christmas loans are usually offered by online lenders and credit unions. Since each lender has their own eligibility criteria, rates, and terms, it’s a good idea to shop around and compare options.

Keep in mind that some Christmas loans, sometimes called Christmas loans with no credit check, are actually payday loans with exorbitant interest rates of 400% or more. That’s why you want to look for vacation loans that are traditional personal loans and cap their interest rates at 36%.

How much can you borrow with a Christmas loan?

Each lender has their own loan limits for Christmas loans. But in general, you will find that most of them range from $1,000 to $50,000. Your credit score, debt ratio and other factors will determine the amount you will be approved for. If you have good credit, you will probably be able to borrow more than someone with fair or poor credit.

Are you eligible for a Christmas loan?

Although the eligibility criteria for a vacation loan may vary by lender, some common requirements include:

  • Good credit — Unless it’s a no credit check Christmas loan, which is essentially a payday loan, you’ll probably need good to excellent credit. If you don’t have the best credit, you may be able to apply for a co-signer to increase your chances of approval.
  • Low debt-to-income ratio — Your debt-to-income ratio (DTI) is the amount you owe in monthly debt payments relative to your income. Most lenders look for a DTI of no more than 40%.
  • Verifiable income — Some lenders will have a minimum income requirement. Even if you come across one who doesn’t, chances are you’ll need to show proof of income so they know you’ll be able to repay the loan.

Visit Credible for compare personal loan rates from various lenders, without affecting your credit score.

How to take out Christmas loans

If you want to take out a loan for Christmas, follow these steps:

  1. Check your credit. Visit or another website that offers free credit reports to check your credit. This way you will know what types of holiday loans you could get approved for.
  2. Compare options. Since there are so many Christmas loans available to choose from, it’s important to get prequalified and explore offers from at least a few different lenders. When evaluating your options, be sure to compare rates, terms, and fees.
  3. Estimate loan costs. Before committing to a holiday loan, make sure you can afford it. You can use a personal loan calculator to do this. Indicate the amount you wish to borrow, your interest rate and your repayment term.
  4. Complete and submit an application. Apply for the holiday loan that fits your budget and your needs. You can usually do this online, but some lenders may allow you to complete the process in person.
  5. Get your funds. Depending on the lender, you may receive your funds within a day or two of approval. Most lenders distribute loans by direct deposit.

Advantages and disadvantages of Christmas loans

Like all financial products, Christmas loans have pros and cons to consider, including:


Christmas loans offer a few potential benefits:

  • Flexibility – You can use Christmas loans to cover all types of holiday expenses, such as gifts, decorations, food, and travel.
  • Guarantee not required — Most holiday loans are unsecured, meaning you won’t have to provide collateral to receive them. That’s great news if you don’t want to put your home or car at risk.
  • Can repay your loan early — Most lenders do not charge prepayment penalties. Paying off your Christmas loan early can help you save on interest.
  • Chance to improve your credit — As long as you choose a lender who reports your payment history, you can use a vacation loan to build or improve your credit. Just make sure you make all your payments on time.


Christmas loans also have some possible downsides to consider, such as:

  • Fewer options for bad credit — If you have fair or poor credit, it may be more difficult to get approved for a Christmas loan with attractive terms. You may have to settle for a higher interest rate.
  • No reward — Unlike many credit cards, vacation loans don’t come with rewards. You may miss cash back, travel points or other benefits.
  • Increase in debt — A vacation loan means you’ll have another payment to deal with. If you’re already struggling financially, you might want to think twice about withdrawing one.
  • Costs – Some lenders charge fees for holiday loans, such as origination fees or a prepayment penalty. These additional costs can add up to increase your debt burden.

What are the other ways to pay for Christmas gifts?

If you’re not interested in a Christmas loan, consider these alternatives to help pay for holiday expenses.

  • Plan ahead and save — Think about your spending well before the holiday season. This way you will have time to shop for them and be able to save money throughout the year.
  • Apps to buy now and pay later — A buy it now and pay later app will allow you to make purchases now and pay off the balance over time. Many of them won’t charge interest as long as you make your payments on time.
  • Credit card – A credit card might be an option, especially if you want to earn rewards. You can also apply for a card with an introductory offer of 0% APR. You won’t have to pay interest for a period of 12 to 21 months.

If you’re ready to be prequalified for a loan, Credible makes it quick and easy compare personal loan rates to find the right one for your unique situation.