What is a Christmas Loan? 5 Best Options

With all the excitement that comes with the Christmas season, no parent wants to tell their kids that Christmas has been canceled.

Financing Christmas with a Christmas loan isn’t ideal, but it may be better than not having Christmas at all.

What is Christmas loan and what are the best Christmas loan options?

There are several loan options available to help you cover the costs of Christmas,— even if you have bad credit.

Learn about five options below to determine which is best for you.

1) Unsecured personal loan

Getting an unsecured personal loan for Christmas is one of the better options available because you don’t have to worry about putting anything up as collateral. Even if your credit is less-than-perfect, you may still be able to qualify for a reasonable interest rate.

For example, Avant’s minimum credit score is 580, and its interest rates are much lower than that of a payday loan. OppLoans has higher interest rates than Avant, but its minimum credit score is 500, and its loans are still less expensive than payday loans.

Even so, it’s not just the interest rate you need to worry about.

Remember that personal loans usually come with an origination fee. This fee typically ranges from 1% to 5% of the total amount you are borrowing.”

“Remember that personal loans usually come with an origination fee,” says Joe Toms, president of Freedom Financial Asset Management. “This fee typically ranges from 1% to 5% of the total amount you are borrowing.”

If you have good or excellent credit, you’ll have even more options.

To get an idea of what you might qualify for, use SuperMoney’s loan engine to get personalized offers from multiple lenders with just a soft credit check.

Featured lenders for personal loans

Lending PartnerMinimum FICO scoreEstimated APR 
60015.49% – 34.99%*Apply
6804.99% – 14.24% (with AutoPay)*Apply
5.49% – 14.29% APR (with AutoPay)*
4.98% – 11.44% APR (with AutoPay)*
6605.99% – 35.89%*Apply
6204.93% – 29.99%*Apply
5809.95% – 35.99%*Apply
7005.25% – 12%*Apply

2) Secured personal loan

If your credit isn’t good enough to get an unsecured personal loan, but you don’t want to deal with sky-high interest rates, a secured personal loan is another option to consider.

Typically, these loans require that you put up some collateral in case you default on the loan. In most cases, it’s a car title or something similar. This can be dangerous if you do end up defaulting, as you likely can’t afford to lose your vehicle.

But if you’re positive that you won’t have any problems paying back the loan, finding a good secured loan could be worth it.

3) Credit card

Normally, using a credit card to finance anything isn’t a great idea. With high interest rates, low minimum payments, and no set repayment period, it’s a recipe for disaster.

But if you can qualify for a 0% APR credit card, you’ll be able to make your Christmas purchases and pay off the balance interest-free.

For example, the Citi Simplicity Card offers a 0% APR promotion on purchases and balance transfers for 21 months — that’s almost two years to pay off your debt.

The drawback is that 0% APR credit cards typically require good or excellent credit.

Shop around to find the card that works best for you.

CardRegular APR 

4) Borrow from family

Depending on your familial relationships, you may be able to borrow some cash from a family member. This is a good option because you can usually get the loan for a low or no interest rate.

That said, it could cause relationship problems if something goes wrong, so only do this if you have a clear plan to pay back the loan. You’ll also want to make sure to pay back the loan as quickly as possible to maintain trust.

5) Auto title loans

If you’re having a hard time getting approved for a Christmas loan another way, consider an auto title loan as a last resort. We say last resort because these loans come with a lot of risks.

Auto title loans require you to put up the title of your car as collateral for the loan. So, if you can’t manage to repay the loan by the due date — which is usually in just a few weeks or months after you receive the money — you could lose your car.

Car title loans are high-interest-rate financial products. These loans are structured to go over longer periods … and the end result will be paying enormous amounts of money in interest.”

“Car title loans are high-interest-rate financial products,” says Fred Winchar, president and owner of TMG Loan Processing. “These loans are structured to go over longer periods … and the end result will be paying enormous amounts of money in interest.”

If you want to go this route, know that some lenders are better than others when it comes to interest rates. For example, Finova Financial offers reasonable rates.

Check out other top auto title lenders to make sure you’re getting the best deal.

Featured Auto Title Lenders

Lending PartnerLoan AmountAPR 
$1,500 – $3,100*30% – 180%*Apply
$100 – $1,500*156% – 240%* (rates vary by state)Apply
$500 – $5000*17% – 30%*Apply

How to avoid needing Christmas loans in the future

Applying for a Christmas loan now can help you solve a current problem, but it’s also wise to look toward avoiding the problem in the future. The best way you can do that is by setting aside a certain amount of cash every month in a dedicated savings account to cover the costs.

To do this, first calculate how much you plan to spend this year on gifts, decorations, a tree, and parties. Then, divide that amount by 12 and start putting that amount into a separate savings account.

For example, let’s say you’re spending $1,200 on everything. This means that you’d need to save $100 per month for the next year to make sure you don’t have to borrow again.

If you feel like this is too much, consider cutting back on your Christmas spending, or take a look at your monthly budget to see if there are areas where you can decrease your expenses.

In the meantime, though, consider all of your options before you apply for a Christmas loan for this year.

Whether it’s a personal loan, credit card, family loan, or an auto title loan, do your research to avoid paying more interest than you have to.