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Americans spent an estimated $887 billion on Christmas and holiday shopping last year and Christmas shopping increased by 8.7% year-on-year.

Around 59% of Americans are financially stressed about higher prices of gifts due to inflation. While 40% of shoppers state their shopping experience will change due to inflation effects, a whopping 95% of them still plan for Christmas shopping.

If you find yourself in a similar situation, Christmas loans can be useful options when planned well.

Some other borrowing options to think of this holiday season are a 0% APR credit cards, buy now pay later loans, a secured personal loan, and a personal line of credit.

What is a Christmas Loan?

A Christmas loan is a type of personal loan offered by lenders as a secured or unsecured loan.

Private lenders typically advertise personal loans before the holiday season as “Christmas Loans” or “Holiday Loans”.

Commercial banks, credit unions, and private online lenders offer these loans to borrowers for Christmas shopping.

However, like any other personal loan, you can use the borrowed money for any personal use. Common uses of Christmas loans include gift purchases, travel expenses, decorations, and shopping vouchers.

You can obtain a Christmas loan with bad credit as well. However, it will increase the total cost of borrowing as lenders will charge a higher APR and loan fee.

Pros and Cons of a Christmas Loan

A Christmas loan will add to your debt amount regardless of how you plan to spend it. It offers several benefits but comes with some risks as well.

Pros of using a Christmas loan include:

  • No collateral requirements on most personal loans.
  • Flexible terms and freedom to use the money anywhere.
  • Easy and quick access to money.
  • You can plan ahead with fixed repayment terms and installments.

Cons of using a Christmas loan include:

  • Higher APR as these are unsecured loans.
  • Not all borrowers can qualify.
  • These loans will increase your debt amount.
  • Failing to repay will damage your credit score.

How to Get a Christmas Loan?

If you’re convinced a Christmas loan is a suitable option for you, follow these simple steps to get the best deal.

Estimate Loan Amount

Create a budget before you apply for a Christmas loan. Estimate how much you want for gifts and shopping expenses this season.

Add a proportion of that amount from savings and the remaining one from the loan amount.

Compare Options

Shop around for a Christmas loan like you would for buying the best gift for loved ones. Compare different features like loan terms, interest rates, collateral, and other requirements from lenders.


Look for lenders allowing you to check eligibility through prequalification. It will not affect your credit score and help you choose a viable option.

Submit Application

Fulfill the requirements for the loan application and submit it as you’ve already gone through the prequalification phase.

Keep Up with Monthly Payments

Once approved, check your payment schedule immediately. Automate your monthly loan payments for better results.

Christmas Loan Alternatives

If somehow, you fail to qualify for a Christmas loan, you can evaluate alternative options as well.

Think of a 0% APR credit card, buy now pay later loan, a secured personal loan, and a personal line of credit.