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Families use loans for trips, but forget insurance

Families use loans for trips, but forget insurance

Category: Travel

Updated: 21/07/2017
First Published: 21/07/2017

The cost of holidays is undoubtedly on the rise, thanks in no small part to the falling value of the pound and high inflation. As a result, a growing number of families are turning to personal loans in order to fund their must-have summer break – yet few are taking out travel insurance, despite the losses that could ensue.

Pricey package deals

Research by M&S Bank reveals that the cost of a family summer holiday has risen by an average of 11.4% compared with a year ago, adding around £462 to the cost of a family holiday for four, with the average now hitting £4,459. As a result, families are expecting to spend £250 less while they're away, but a growing number are also turning to credit to cover the cost.

That's according to Freedom Finance, with their data revealing a marked increase in applications for holiday loans in recent weeks, as families look for ways to cover ever-rising holiday prices.

Indeed, the loan provider saw a 20% increase in the number of holiday loan applications in June 2017 compared with a year earlier, while the total value of holiday loans approved in the month stood at over £5.5 million, an increase of 23% from the £4.5 million approved in June 2016.

Brian Brodie, chief executive of Freedom Finance, said: "Holiday loans are one of the top four reasons people apply for finance and it is clear that people aren't ready to forgo a break in the sunshine, despite the rising costs."

If this is the option you're going for, just make sure you can comfortably afford to make the repayments, and ideally choose the shortest term possible so you're not still paying for this year's holiday in three years' time. Make sure to get the cheapest loan rate, too – use our personal loan calculator to get started and keep your repayments to a minimum.

Lack of security

However, despite the rising costs of holidaying, it seems that few people are looking to insure those costs with travel insurance, which means many could lose a substantial sum of money if things went wrong.

Asda Money Travel Insurance found that holiday mishaps collectively cost families £976 million as they travel without insurance, as although 65% of survey respondents had a suitable policy in place, many didn't – and as a result they were hit with an average bill of £152 from a holiday disaster.

This is on a conservative end of the scale, too. What if you had to cancel your holiday completely due to factors outside your control? Without cancellation cover, chances are that you'd lose the whole cost of your trip – which could easily rack up to the thousands of pounds – and if you'd taken out a loan, you'd still need to make the repayments, too.

Then there's the potential to be hit with medical bills while you're abroad, or even lost luggage or stolen items – this is why getting the right travel insurance policy from the outset is essential, as there'd be nothing worse than being left with a hefty bill.

"Holidays are such an important aspect of family life and give us all something to look forward to throughout the year, but there is no way to predict what accidents are waiting around the corner whilst we are trying to relax and unwind," said Neil Foster, head of Asda Travel Insurance.

"These dramas can often result in holidaymakers reaching for their wallet for an unforeseen expense. We know that accidents happen, and with the increasing cost of medical assistance abroad, travel insurance ensures customers have available assistance in the event of an emergency."

So don't leave home without the right cover! Whether you've saved up all year or will be turning to credit to cover the cost of your summer holiday, make sure you insure it against any unforeseen circumstance.

What next?

Use our personal loan calculator to find the right deal

Compare travel insurance quotes

Want to plan ahead for next year's summer holiday? Open a regular savings account

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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