Financing the cruise: This is how the dream of vacationing on the high seas can become a reality

After a long dry spell caused by corona, the cruise industry has picked up speed again. Travelers' interest in cruises is growing, fueling confidence in the tourism industry sector.

Cruises have not become cheaper due to the negative developments of recent years. Like many others, the industry is feeling the effects of price increases in all areas and, not least because of the economic losses in recent years, sees itself forced to pass on the increased costs to travelers. Especially for long-distance trips and family trips, the travel costs can quickly exceed the available budget. The more comprehensive the booked travel service, the more expensive it can be the well-deserved break become. But that doesn't mean that you can only have a balcony holiday. Travel in a higher price category can also be feasible if the costs are covered by cheap financing, for example.

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Willingness to take vacation on credit is growing

At the latest with the persistent inflation and the increased cost of living, vacation travel has become a luxury good. At the same time, time out from everyday life has never been as important as it is now. Since it is hardly possible to finance especially expensive travel plans from the household budget, more and more vacationers are willing to use a loan for their vacation.

Many tour operators have already responded to this trend and are offering customers uncomplicated financing concepts. The credit option for the repayment of travel expenses has become a popular marketing tool in the highly competitive travel market. This development has a positive side effect for travelers, because it has never been so easy to finance vacation trips on favorable terms. How can an installment loan help to make the dream of a luxury vacation on the high seas a reality, which loan terms are really favorable and what should travelers consider when planning financing for their vacation trip?

Installment payments as a sales argument

If you want to treat yourself to an extensive holiday trip these days, you have to have the necessary money. In many households, the holiday budget is topped up by consistent reserves over months. If the possibilities for a travel savings stocking are too small due to high household costs, the vacation fortunately does not have to be cancelled. Many tour operators have correctly interpreted the declining booking figures in recent years and have created new opportunities for customers to book a relaxing break even without a sufficient budget.

The most common model is cooperation with a renowned financial service provider. PayPal and Klarna are the main players here. Tour operators such as Expedia, Hotels.com, FTI or midnightdeal offer their customers the option of paying in installments when booking. Payment is made via the financial service provider, who makes the total amount available to the tour operator and passes it on to the customer according to the agreed rate conditions. Installment payments are usually associated with additional costs, which vary depending on the repayment period, the number of installments and the repayment amount per installment. The more installments you want, the higher the additional costs. For reasons of competition, however, some organizers have already started to attract customers with zero percent financing. In this case, the payment of the total amount can be spread over several installments without incurring any additional costs.

Another option for financing a holiday trip is private installment loans. They are offered by many banks and credit institutions and can usually be flexibly adapted to the individual situation in terms of amount and repayment modalities. The amount provided, terms and interest incurred as well as special repayment options vary depending on the provider and loan amount. For a first comparison, travelers can use a loan calculator so you can put together the cheapest offers with just a few clicks.

Tour operators are registering an increasing number of customers who use installment options and see the adjustment of their payment modalities as an important sales argument. Especially for a broad middle class of customers in the tourism industry, installment payment as a payment option can be the decisive factor in deciding on a high-priced travel option. Event organizers can use this service to reach a broader target group. Cruises are one of the types of travel that are often financed through cheap installment payments or a loan. After the sustained slump in recent years, the financing model is strengthening the industry and is an opportunity for many vacationers to fulfill a long-cherished dream.

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Who can finance a cruise by paying in installments?

One of the most persistent misconceptions about cruises is that they are unaffordable. Of course, long-distance trips lasting several weeks on a 5-star luxury cruise ship have their price. If you want to go on a world tour in a floating luxury hotel, you should expect costs of between 30.000 and 40.000 euros. The services included in the travel price are usually very high. In addition to high-quality full catering, the complete package also includes an extensive animation program, numerous culinary and cultural amenities during your stay on board and often also entrance fees to certain sights on land.

The prices for a cruise also vary greatly and depend on the category of the ship, the length of stay on board, the size and location of the cabin (inside or outside cabin), the destinations and the additional services that are offered and booked. At first glance, cruises often appear very expensive compared to various other travel options, but the price-performance ratio is usually very good and puts the costs into perspective when you take a closer look.

If you want to treat yourself to a holiday in one of the floating hotels, you can use financing under certain conditions. If a tour operator offers payment in installments via cooperation with PayPal or Klarna, the credit rating guidelines of the respective financial service provider apply to the financing.

Access via PayPal the “Buy Now Pay Later” concept. Legally, this is a small loan with installment payments. For all financing that runs through this business model, the financial service provider carries out a credit check in advance. This is done by querying the major credit agencies such as Schufa, Bürgel and Avato. In addition, PayPal analyzes its own data that is collected and stored in the course of the payment history of each customer.

The payment service provider Klarna also carries out a credit check if the option "Invoice in 30 days", "Pay in 3 installments" and "Klarna financing" is selected to pay with a cooperating tour operator. At Klarna, the credit check is carried out by querying the credit agencies Schufa, Boniversum and Arvato.

If the travel financing is to take place via an installment loan from a financial service provider or directly from the tour operator, a credit check in the form of a positive credit bureau report is usually also a prerequisite. Permanent residence within Germany is often required and depending on the provider and the amount and conditions of the installment loan, the lender also offers to provide proof of regular income.

Bank, private lender or credit card: Where is financing particularly cheap?

In principle, the costs and framework conditions for travel financing can vary greatly depending on the provider. The creditworthiness of the applicant, the amount of the loan and the desired repayment period are particularly important. If you want to repay the travel expenses in a few individual loan installments and over a short period of time, this is usually cheaper than if the loan amount is to be made available over a longer period of time and repaid in many small installments. Here it is worth making detailed comparisons at an early stage, because ultimately it is the overall offer with all additional costs that decides whether financing a trip is actually worthwhile.

With financing via financial service providers such as PayPal or Klarna, it is possible that no additional costs will be incurred depending on the repayment method selected. Even with a loan directly from the tour operator, it is possible for them to offer their customers 0 percent financing in order to exploit their competitive advantage in the highly competitive travel market. With the tour operator, it is also worth comparing which business model is maintained with regard to a down payment. With major cruise operators like AIDA, TUI Cruises or Costa, a deposit of 20 percent of the total amount for the trip is often due immediately after booking. Other providers waive the down payment and offer their customers the option of financing the full 100 percent of the travel costs right from the start. If this is possible without additional costs, such an offer creates additional financial leeway

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The house bank can often offer favorable credit conditions. She does not need an additional credit check because she knows the payment behavior of her own customers and can assess the economic situation. If there is a long-standing good contractual relationship, a cheap small loan may be possible. If you want to compare your options, you shouldn't do without a visit to your house bank.

Installment loans from a private loan provider are often more expensive but very flexible. The conditions here can differ significantly. It is worth obtaining many comparative offers and having the individual providers present you with different repayment options and their framework conditions. Depending on the amount of the loan, an independent installment loan can be considered, or a earmarked loan for which proof of the use of the loan amount made available must be provided.

Financing by exhausting the credit limit of the credit card is also possible. The respective conditions of the credit card provider apply here. The interest on the credit line of the credit card is often comparatively high and the repayment periods are limited. If you want to finance part of the travel expenses or the entire trip with your credit card, you should find out in advance about the business model of the provider and, if necessary, have an individual offer made.

There are many options for financing a trip, and the hurdles to obtaining financing are now relatively low. Anyone who has a positive credit bureau and a regular income can generally use travel financing in installments. If the financing conditions are favorable, it can make sense to pay off the costs for a high-priced trip such as an extended cruise in installments conveniently and without financial pressure. Especially for unique opportunities in life such as a trip around the world or a honeymoon on a grand scale, it is worth thinking about financing the travel expenses so that long-cherished travel dreams can become reality.

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