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The Best Financial Options For A Staycation

03.07.2020 by Alice G

Family at staycation

The overwhelming majority of people have decided that it's staycation season. Due to the lockdown and the pandemic, travelling abroad for your summer vacation is not something you should consider lightly. It's a serious time, and yet, people want to forget about their worries and have an excellent time out in the sun. But a staycation means you need to consider a few things. Will you be renting a caravan? Will you be taking a mobile trailer to whatever town or village you want to visit? Will you be staying in a cottage instead? What kind of things would you like to experience while you're exploring the hidden parts of your country? Most of all, how much will it cost? If you feel that you have to resort to penny-pinching or there's no vacation at all, you need to be more open-minded. Here's why:

You already had the funding

If you have a savings account, you already have the funds you need to go on holiday. It is a good idea to check with your bank to see if you can take a little portion of your savings out. You might still be within the threshold of limited access as savings accounts usually need you to keep money in the account for a few years. You may also incur penalties in the form of interest rate dips, which can mean, your savings don't accumulate as much interest as they usually would.

You should also be wary of what type of savings account you have. If it's just a standard ISA, then the information above will apply. However, if you have a long-term savings account such as a retirement fund, you may find that you will only have access to the money upon retiring or at retirement age, such as 65 years old. Speak with the bank's financial advisor to see if you face any additional tax liabilities. The bank may also become warier of you, as they deem short withdrawals of a savings account to possibly be, the start of more withdrawals for everyday spending, etc. Reassure your bank that you're only doing this as a one-off due to the lockdown and financial strain. You could also let the bank know what you intend to use the money for if that decreases their worries.

Hire a financial advisor

A financial advisor can act as your financial planner and help you to save up enough money to go on holiday this summer. Their skills lie in both micro and macro-management. Since we're so close to the summer now, it's wise to hire a financial advisor that can enlighten you on what kind of options you have for funding your summer vacation. It may be that all you need to do is watch your grocery shopping for the next month or so and you'll have enough for a weekend or possibly a week.

A financial advisor will also show you options that you can use recurrently. It could be in the form of renting your house out as a summer vacation home to travellers. You can also work with Airbnb to give a spare room to someone, for a bit of rent money and the stays are always short-term anyway. You could sell a few things that you don't need at an auction and gather a couple of hundred pounds for your weekend away. A financial advisor will also tell you about things like leasing a car parking space. Your driveway could help somebody local, and earn you a little money every month.

Help for the self-employed

The furlough scheme the Treasury has been running for a few months is due to be given a second injection. This is due to the virus lingering on, and so many businesses have no other choice than to shut up shop or work at half capacity. The furlough scheme round 2 is going to help self-employed people as well, not something that the original plan did.

The Chancellor of the Exchequer Rishi Sunak has said that a 'second and final' furlough scheme will include help for the self-employed, starting from August. 'Bounce back' loans will be given to around 750,000 businesses who will then need to use the money to supplement workers' wages. This, in turn, means that workers that have had their pay reduced naturally, due to their employer unable to earn as much as before, will have their wages' topped up' by the second furlough injection.

Whether you're working for a company or working for yourself, the new second injection furlough scheme will return your salary up to where it was before the pandemic. So, hold on a little while longer, and you will have money to go on a staycation.

The hidden value in your car

Your car is an asset that can be used to fund your summer vacation if you know who to talk to. Get a loan on your car from a logbook loan company, who will show you the hidden value in your vehicle. What they do is unlike box-standard logbook loans. When you borrow against your vehicle using their vehicle equity release scheme, you get to keep ownership of your car. You can still keep driving your car, but a large portion of the value is taken out in equity.

We are a 5-star Trustpilot company that can give you a loan up to 70% of your car's value. We also use a purchase agreement which offers higher borrower protection than the standard bill of sale contract other logbook loan companies offer. It also means we are regulated to a higher standard. Yet, we can get the money to your account in 60 minutes flat. Complete our video call inspection and then sign the contract via e-signature, so you never even have to leave your home to get things rolling. We recommend you start paying the loan back as soon as you can, even making higher payments than agreed if that's possible.

We allow you to borrow between £5,000 to £250,000. So if your car is worth £100,000, we could sort out a loan of £70,000 for you in just 1 hour. This should give you the confidence to have a brilliant summer vacation after being trapped indoors for so many months.

Make debt payments

When you have a debt to pay, it's not so much the figure itself that gets underneath your skin; it's the interest. Paying off your debt as quickly as you can, will make the whole process smoother in the long run. This is because the outstanding balance that's you owe will incur a higher interest payment.

If you have a personal loan of £8,000 at an interest rate of 3%, on a 3-year contract, owing £5,000 means your next payment will be £222 + £150 = £372. But if you only owed £3,000, your next payment would be £312. The quicker you can make payments, the less the interest rate will bite you. It's better to make overpayments when you can so that you can avoid the extra hit. This will also bode well for your credit score. The loan company will also be more inclined to give you a better deal the next time around as you've shown yourself to be a right, responsible customer.

If you have an overdraft, now is time to start making larger and more substantial payments to get the monkey off your back. Due to the lockdown, many banks have decided to lower the interest rates for overdrafts. Some have seen their interest rates fall from 26 per cent to just 11 per cent. But this doesn't mean you should take it easy; you will save a lot of money just by sticking to the repayment schedule. You won't get this kind of opportunity again and it will be gone in a few months.

Secured loan

A secured loan involves putting up your house as collateral. This allows lenders to be generous with the terms and amounts. You could get a secured loan worth in the tens of thousands and have a long contract that could total in the many years. However, secured loans are likely to have a high minimum as many lenders would only agree to a loan that is £5,000 and above. The repayment terms are quite generous as mentioned, ranging from 3 to 25. Some companies will offer an even longer duration than that. This is because they see themselves as an alternative to a typical mortgage.

As you can see, there are so many great options out there for funding your summer vacation. Out of all these options, an equity release loan is perhaps the more attractive. Not only do you get to keep driving your car, but you also get up to 70% of the value of your car and the cash arrives in just 60 minutes. Repaying any debts you owe will limit the hit of the interest rate, but if you'd rather not wait, you could dip in your savings account for a bit of holiday spending money.