Money
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Travel smoothly with the right personal loan
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In the excitement of organising a holiday or overseas trip, many travellers overlook the seemingly mundane matters of getting the personal loan or appropriate travel insurance.
Mark Denham, Manager personal banking at bnext, says for people without sufficient savings to cover travel costs a personal loan is more often cost-effective than lumping all expenses on a credit card. He advises using the personal loan for pre-trip booking costs, while a credit card can cover additional expenses during the holiday.
"Have that clear distinction, so at least at the end of the day the debt to fund the trip is covered off," Denham says.
Consolidating any spending debt on the personal loan upon your return makes sense rather than leaving it on a credit card that may incur higher interest rates.
When choosing a personal loan, check factors such as interest rates, establishment fees and flexibility around repayment options (for example, if penalties are imposed for paying off the loan early).
"Those factors can all add to the overall cost," says Denham, who adds that providing a financial institution with security in the form of a motor vehicle or another asset usually ensures a lower interest rate.
Travel Insurance is also crucial. While most people take out insurance for an overseas trip, they often ignore it for domestic travel. That can be costly if, for instance, a family loses all its baggage and has to pay for replacements. Denham says reading the fine print of Travel Insurance docuemtns is vital. Under-Insurance is often an issue for those who "begrudge" making higher payments to safeguard expensive items such as cameras or jewellery. "People often don't find out what is covered until they go to claim".
Consider your destination when taking out insurance. Risks vary dramatically from region to region. In poorer countries, the chance of being a victim of theft may rise. In a developed country such as the United States, the cost of medical bills are notoriously high if an accident or unexpected illness strikes you down.
bnext offers four levels of travel insurance cover to factor in varying risks: comprehensive international, Australia only, budget cover and frequent traveller.
Denham notes that travel agencies like to "up-sell" insurance when airfares and accommodation are booked. While that is easy, he says most financial institutions also provide travel insurance and can often deliver a better deal. "Don't always just take the easy option of taking out the policy through the Travel Agent just because it's convenient."
For any personal loans and travel insurance enquiries, please contact us on 1300 4 BNEXT.
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Any advice given is of a general nature only and does not take into account your individual objectives, financial situation or needs.
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