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

It can be expensive to pay for Christmas gifts and other holiday-related costs like food, decorations and travel. That’s why many people seek out Christmas loans. These loans can make it easier to cover these expenses so you can thoroughly enjoy the holiday season. 

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

If you’re looking for a Christmas loan, Credible makes it easy to from various lenders, all in one place.

What are Christmas loans?

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

How does a Christmas loan work?

With a Christmas loan, you’ll receive a lump sum of money up front and repay it over time, usually via fixed monthly payments. 

Christmas loans are typically offered by online lenders and credit unions. Since every lender has its own eligibility requirements, rates, and terms, it’s a good idea to shop around and compare options. 

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

How much can you borrow with a Christmas loan?

Every lender has its own limits for Christmas loans. But in general, you’ll find that most of them range from $1,000 to $50,000. Your credit score, debt-to-income ratio, and other factors will determine how much you’ll be approved for. If you have good credit, you’ll likely be able to borrow more than someone with fair or poor credit. 

Do you qualify for a Christmas loan?

While eligibility criteria for a holiday loan can vary by lender, a few common requirements include: 

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

Visit Credible to from various lenders, without affecting your credit score.

How to take out Christmas loans

If you’d like to take out a Christmas loan, follow these steps:

  1. Check your credit. Visit AnnualCreditReport.com or another website that offers free credit reporting to check your credit. This way you’ll know what types of holiday loans you might get for.
  2. Compare options. Since many Christmas loans are available to choose from, it’s important to get prequalified and explore offers from at least a few different lenders. When weighing your options, make sure to compare rates, terms, and fees.
  3. Estimate loan costs. Before you commit to a holiday loan, make sure you can afford it. You can use a personal loan calculator to do so. State the amount you want to borrow, your interest rate, and your repayment term.
  4. Fill out and submit an application. for the holiday loan that meets your budget and needs. You can usually do so online, but some lenders may let you complete the process in person.
  5. Get your funds. Depending on the lender, you can receive your funds within a day or two of approval. Most lenders distribute loans via direct deposit.

Benefits and downsides of Christmas loans

Just like all financial products, Christmas loans come with pros and cons you should consider, including: 


Christmas loans offer a few potential advantages:

  • Flexibility — You can use Christmas loans to cover all types of holiday expenses, such as gifts, decorations, food and travel.
  • Collateral not required — Most holiday loans are unsecured, meaning you won’t be required to put up collateral to receive them. This is great news if you don’t want to put your house or car on the line.
  • Can repay your loan early — Most lenders don’t 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 that reports your payment history, you can use a holiday loan to build or improve your . Just be sure to make all your payments on time.


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

  • Fewer options for bad credit — If you have fair or poor credit, it might be more difficult to get approved for a Christmas loan with attractive terms. You may have to settle for a higher interest rate.
  • No rewards — Unlike many credit cards, holiday loans don’t come with rewards. You may miss out on cash back, travel points or other perks.
  • Increased debt — A holiday loan means you’ll have another payment to manage. If you’re already struggling financially, you might want to think twice before you take one out.
  • Fees — Some lenders charge fees for holiday loans, like origination fees or a prepayment penalty. These extra fees can add up and increase your debt burden.

What are some 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 expenses long before the holiday season. This way you’ll have time to shop around for them and be able to save up money throughout the year.
  • Buy-now, pay-later apps — A buy-now, pay-later app will let you make purchases now and repay the balance over time. Many of them won’t charge interest as long as you make your payments on time.
  • Credit cards — A credit card could be an option, especially if you’d like to earn some rewards. You can also apply for a card with a 0% APR intro offer. You won’t have to pay interest during a period that may be anywhere from 12 to 21 months.

If you’re ready to get prequalified for a loan, Credible lets you quickly and easily to find one that works for your unique situation.