'Tis the season to be jolly — yet many people worry about how to pay for Christmas. With gifts, decorations and festive foods to buy, it’s no wonder the average household is estimated to spend an extra £740 in December. A Christmas loan is one way to spread the cost. Our guide explains how Christmas loans work and how to find your cheapest offers.
Getting a loan for Christmas is a personal choice. While it’s wise to save up, these things don’t always go to plan. A Christmas loan (also known as an Xmas loan) may suit you if you can easily afford the repayments and don’t mind paying interest even when the holiday excitement has faded. Avoid a Christmas loan if there’s a chance you’ll miss payments, as this lowers your credit score and may lead to fines and even legal action.
Some Christmas loans may have special promotions or deadlines to apply. But most are the same loans you’ll find all year round. Some lenders put “Christmas” in the name as a way of promoting loans at this time of year.
Christmas loans are usually unsecured loans (also called personal loans) meaning they aren’t tied to your property or vehicle. If you get a secured loan instead, there’s a risk of losing your home or car if you miss payments.
You can use a Christmas loan for most things. Lenders may have a few rules such as not using the loan to gamble. Make a budget to help you spend your loan wisely. Extra cash for Christmas could pay for things like:
Personal loans are typically between £1,000 and £25,000 although some lenders may offer up to around £50,000.
If you’re looking for a small loan for Christmas, you may come across payday loans. These offer smaller amounts and can be quick to get, making them attractive to people who need an emergency Christmas loan. But they’re very expensive with interest rates of around 1,250%. Consider alternatives like a credit union loan, short-term bad credit loan, or credit cards for bad credit.
How much you can borrow for Christmas also depends on the lender’s criteria. A good credit score and higher income may help you get a larger loan. See loans you’re eligible for when you search with Experian. Searching is free, takes less than two minutes and won’t affect your score.
Christmas loan applications can usually be made online or over the phone. Lenders typically ask for information like your name, address, job, monthly income and so on. Give yourself plenty of time and check if there’s a deadline to apply.
The lender will do a hard credit check to help them decide whether to approve you. This makes your score dip, but it should recover over time if you look after it.
Your Christmas loan will be paid into your bank account — this may take a few hours or several days depending on the lender. You’ll make set payments each month to pay back the amount you borrowed plus interest.
All UK lenders have to do credit checks, so you can’t get a no credit check loan for Christmas. The good news is there are loans specifically designed for people with low credit scores, called bad credit loans. Also consider a guarantor loan where someone (usually a parent or partner) agrees to pay the loan if you can’t.
The cost of borrowing for Christmas depends on things like your annual percentage rate (APR), how much you borrow and how long for.
APR reflects both the interest rate and most fees. It’s calculated as a percentage of what you owe, meaning a higher APR or larger loan increases the cost.
Borrowing for longer will lower your monthly payments but increase the cost overall. Also, you may want a short-term Christmas loan so you aren’t still paying for it when next winter rolls around.
Here are some examples of Christmas loans.
| Example A | Example B | Example C | |
|---|---|---|---|
| Amount borrowed | £1,000 | £1,000 | £1,000 |
| APR | 20% | 30% | 20% |
| Loan term | 1 year | 1 year | 3 years |
| Monthly payment | £91.86 | £95.79 | £36.34 |
| Total to repay | £1,102.28 | £1,149.43 | £1,308.20 |
| Overall cost | £102.28 | £149.43 | £308.20 |
Loans A and C have the same APR, but loan A is cheaper overall because it’s shorter. Loan B is as long as loan A, but it’s more expensive due to its higher APR.
These are just examples, and your offers may look different. Some costs aren’t reflected in the APR such as early repayment fees.
Getting a low-interest loan is one way to cut the cost of borrowing for Christmas. You may need a good credit score to get approved. Luckily there are ways to improve your score — it’s even possible to get an instant lift with Experian Boost.
It depends on things like the type of loan and the current market. See what’s on offer by searching Christmas loans with Experian. We use data from your credit report and a range of lenders to find the best loans for you. Searching loans won’t cost a penny or affect your score.
Christmas loans aren’t right for everyone. Here are some other ways to get extra money for Christmas. Remember to make repayments on time and only borrow what you can afford.
Purchase credit card
Credit cards have flexible payments, meaning you choose how much to pay each month as long as you meet the minimum amount. You pay interest on what you owe. Purchase cards sometimes have an interest-free period lasting around three to 30 months. If possible, pay off your balance before this period ends and you’re put on the lender’s standard variable rate.
Money transfer card
A money transfer card lets you pay an amount into your bank account which you can withdraw. There may be a fee for each transfer. You may get a 0% promotional period, after which you’ll be put on the lender’s standard variable rate.
Arranged overdraft
An overdraft is linked to your current account, meaning you can withdraw it as cash or spend it on your debit card. The repayments are flexible and you’ll be charged interest on the amount you owe. Get your bank’s approval to avoid fines for an unarranged overdraft.
Buy now pay later
Shopping online? You may see an option to spread your payments with buy now pay later schemes like Klarna. Some offer a 0% period for around one to three months, but you’ll usually pay a high interest rate once this period ends.
Saving and cutting costs
Lots of people find it hard to pay for Christmas. Being open with family and friends about what you can afford may take pressure off all of you. If you’re hosting, things like Secret Santa and potluck dinners may help you share the cost.
It’s also worth planning ahead for next Christmas. Consider saving an amount each month. Look for bargains throughout the year (but only buy what you need). You’ll often find discounted Christmas decorations in January for example.
Search Christmas loans from a range of trusted lenders with Experian. We use your unique data to show you offers you’re more likely to get. Searching is free, takes less than two minutes and won’t affect your score.
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