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Book now, pay later vacations are on the rise. As more people set off on adventures around the world, they’re realizing that travel can be expensive. However, there are a growing number of options to pay for those getaways, including travel payment plans.
Here’s what would-be travelers need to know about this travel hack and payment option and how to decide if it’s right for them before they take off in a plane, train, or automobile.
Key Points
• Book now, pay later vacations let travelers secure trips upfront and pay in installments through companies like Affirm, Klarna, and Zip.
• Major providers offering payment plans include Expedia, Priceline, Hotels.com, VRBO, leading airlines, and cruise lines.
• Benefits include locking in deals without upfront savings, but risks include high interest, overextending finances, and potential credit score impact.
• Some companies run credit checks or report late payments, which can hurt borrowers’ credit profiles.
• Personal loans may be a safer alternative, offering fixed rates often lower than BNPL or credit cards.
What a Payment Plan Vacation Really Means
Buy now, pay later vacation plans work in a similar way to traditional layaway options at stores. Travelers pay a little upfront and pay off the rest over an agreed-upon timeline. However, unlike traditional layaway, where a person can pick up their item only when payments are complete, travelers get their item — their trip — upfront.
There are several book now, pay later payment options on the market including Afterpay, Affirm, and Klarna. When booking a vacation using a payment plan option, you’re actually paying the financing company rather than the travel company itself.
For example, if you book a Carnival cruise (one of the companies offering this as an option), you’ll pay via Flex Pay, which provides this service. Flex Pay will then pay Carnival directly for the vacation in full. When you make payments, you’ll be paying Flex Pay, not Carnival.
Payments can be made over weeks or months, depending on the trip you’re taking, how much it costs, and which payment option you choose. Before signing on the dotted line, you’ll be assigned an interest rate based on data including your credit score, much like you would when applying for a credit card or loan. The rate will always be displayed before you click “book,” but reading the fine print is important so you are aware of all the terms of the agreement, not just the interest rate.
Recommended: Personal Loan Calculator
Companies That Offer Buy Now, Pay Later Vacations
The love for vacation payment plans is growing across the travel industry. Here are a few of the major players that are in the game.
Expedia: Expedia offers book now, pay later vacations through Affirm. At checkout, travelers can choose whether to make four interest-free payments every two weeks or monthly installments.
Priceline: Like Expedia, Priceline also offers book now, pay later vacation payment plan options with Affirm, with similar payment options.
Hotels.com: Hotels.com is offering payment plan options with buy now, pay later services like Affirm, Klarna, Sezzle, and Zip. Customers can split their payments into installments over time.
VRBO: VRBO is also getting in on the book now, pay later vacation option with Affirm. Customers can pay the total cost of the trip in installments, which accrue simple vs. compound interest, with rates ranging from 0% to 36% APR based on your credit profile.
Airlines: Airlines are also offering a book now, pay later option for those looking to fly to their destination. American Airlines, Delta, United, and Southwest are among the airlines offering this option through such providers as Affirm and Klarna.
Cruise lines: Cruise lines are also getting into the act. Carnival, Disney, Norwegian, and Royal Caribbean are all offering vacation payment plan options to cruise lovers looking to stretch their vacation budgets out over months.
Recommended: Guide to Unsecured Personal Loans
The Pros and Cons of Book Now, Pay Later Vacations
There are benefits to the book now, pay later vacations. Most obviously, you can book a vacation now and pay for it later. That could allow you to lock in your plans — and maybe even take advantage of a good deal or favorable rate — instead of having to wait until you’ve saved enough cash.
But there are potential drawbacks, too.
For starters, travelers may run the risk of overextending themselves financially if they book a vacation but can’t make the payments on it. According to a report by the Consumer Financial Protection Bureau, book now, pay later travelers are more likely to be highly indebted and juggle multiple loans simultaneously.
There’s also the potential impact on your credit score. Though not all companies run a credit check when you choose the book now, pay later option, some do. And this could affect your credit score. Likewise, the service may report late payments to the national credit bureaus, which could also negatively impact your score. To find out if a credit check will be run before booking, reach out to the service directly.
Personal Loan as an Alternative to Buy Now, Pay Later
If you want to take a vacation without having to save the money to pay for it first, you may want to consider a personal loan.
Taking out a personal loan is still taking on debt. But an unsecured personal loan allows a borrower to take out the amount needed to pay for a vacation with fixed interest rates that are generally lower than credit card rates and possibly lower rates than those offered by buy now, pay later financing options. Shop around and compare rates and terms to see what makes the most sense for your financial situation.
The Takeaway
Many travel retailers, airlines, and cruise companies are now allowing travelers to book their vacations upfront and then pay them off over time. While this could allow travelers to lock in a good deal, there are possible drawbacks to consider, including potentially high interest rates upon repayment. Travelers should look at all their payment options when deciding how to finance a trip.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
FAQ
How can I book a vacation and pay later?
One way to book a buy now, pay later vacation is to navigate to a company or travel site that offers this payment option. After you choose your trip, you can opt for a pay by installment option such as Affirm or Klarna and complete the application. If you are approved, you can then pay for the vacation over time.
What are good sites for buy now pay later services?
There are a variety of buy now, pay later sites such as Affirm, Afterpay, Klarna, PayPal, and Zip. Which one is the best choice will depend upon your needs, such as the purchase you want to make, and your financial profile and situation.
Can you pay for a vacation with Affirm and similar services?
Yes, you can pay for a vacation with a buy now, pay later service like Affirm. You can opt for that payment option at many travel booking sites and then pay over time (provided your are approved). Then, you can pay for your getaway in installments over a set period of time.
Photo credit: iStock/hudiemm
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