These companies let you pay for your vacation in installments. Should you?

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These companies let you pay for your vacation in installments. Should you?

Sydney Richardson wanted to attend a concert in South Korea this past November. But the college student from Illinois couldn't afford to pay the nearly $800 airfare up front. However, she found Airfordable, a service that allows people to pay for flights in installments, which made the trip affordable.

"I was on a biweekly plan and I paid for my trip every time I got a paycheck," Richardson said. "It was really convenient."

Richardson's trip ended up costing $968. The 19-year-old paid Airfordable a $168 convenience fee and an up-front payment of $300. Airfordable deducted $108 from her bank account every other week.

Airfordable requires borrowers to pay them back before issuing a plane ticket, which Richardson did early.

Airfordable is one of a number of services allowing travelers to finance their trips. The company did not respond to a request for comment. Richardson said she would use the service again, but is it a good idea to pay for travel in installments?

What do these services do?

Affirm was founded in 2012 and has offered financing for travel since partnering with Expedia in 2016. There is a growing demand for ways to pay for travel other than using credit cards, said Elizabeth Allin, a spokeswoman for Affirm.

Aside from Expedia and its brands, which include Orbitz and Travelocity, Affirm also partners with travel websites CheapAir, Suiteness, Groupon Getaways, Rose Tours, Student City and JusCollege. The Affirm app allows buyers to make purchases using Affirm anywhere on the internet, including from airlines and travel agencies.

Why not just save up before traveling? By the time travelers are able to do that, airfares may have increased, as they tend to do as the departure date approaches, said Tom Botts, chief commercial officer for UpLift, another company offering installment payments to travelers. Booking ahead of time with the help of a loan can lock in lower prices for airfares or vacation packages, he says.

UpLift has been making loans for more than a year. It's made up of people experienced in online lending and travel experts like Botts, who has worked in the industry for 30 years.

"We really felt we could create something that would be very easy for the travel industry to participate in while also making it an attractive offer for consumers," Botts said.

How do they work?

To use UpLift, users book like they normally do with a travel merchant like JetBlue Vacations, an UpLift partner. When it comes time to pay, there will be a link to apply for credit through UpLift by entering the last four digits of your Social Security number. UpLift will perform a "soft pull" of your credit, which doesn't affect your score, to complete the application.

UpLift offers loan terms of three, six or 11 months, depending on the amount, Botts said. There are no fees for paying early. Unlike Airfordable, UpLift allows borrowers to travel before fully paying back the loan.

Aside from JetBlue, UpLift loans are available through partners including United, American Airlines and Lufthansa. UpLift continues to add more partners, Botts said.

Affirm loans are also available while booking with one of its partners. Through the app, users can also receive a one-time virtual debit card number to use at checkout on the websites of merchants who haven't partnered with Affirm.

Should you finance your trip?

If buying a ticket in advance lowers your fare more than the fees you pay, then it could be a net savings, said David "Trey" Bize, a certified financial planner. But that savings could be lost to late fees or having to pay off the loan with a high-interest credit card.

"If people want to financially get ahead in life, they cannot borrow money for their vacations," Bize said.

People get into trouble when they spend money they don't have. It takes discipline to pay it back and it can be easy to fall into a cycle of going into debt, paying it off and borrowing again, Bize said. It's less risky and less costly to save up to pay for a vacation, then replenish your savings before your next vacation, he said. (Can't afford a vacation? Consider a staycation.)

What are the fees?

Trip finance companies argue their fees are generally cheaper than interest rates for credit cards.

Affirm charges annual percentage rates ranging up to 30%. It doesn't charge late fees or origination fees, Allin said.

"We show a buyer exactly how much interest they will pay in a dollar amount, rather than a percentage that must be calculated, up front," Allin said.

UpLift loans start at 8.99% for highly qualified borrowers and loan amounts up to $15,000. As a comparison, average credit card interest rates reached 13.63% in February, according to the Federal Reserve.

For a $1,500 trip paid over 12 installments, UpLift estimates borrowers pay an extra $10 a month, said Botts.

"That's far cheaper than waiting until the last minute when airlines and hotels and vacation packages are all raising their prices," Botts said.

Richardson, the college student, said she would happily finance a trip through Airfordable again.

"It made my trip so much more realistic in the sense that I could actually afford it," she said.

How to save on travel

Borrowing isn't your only option if you're struggling to pay for travel. If you must turn to financing, make sure to compare offers from several lenders, including APRs for travel credit cards, before borrowing to make sure you're getting the best rate. While you're at it, shop around for the best prices on flights, rooms and vacation packages.

If your vacation still feels out of reach, you may want to change up travel times or your destination. Weekday flights at weird hours tend to be cheaper, and less popular travel destinations may also save you money.

Want more ways to make your getaway less expensive? Here are 15 easy ways to save on travel.

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