Commuting to work can be an expensive business. An annual season ticket to London terminals from nearby commuter town Guildford costs a cool £3,956 in 2024. That’s over £1,000 cheaper than buying 52 weekly tickets, though, so it’s worth stumping up the cash once a year. The further you travel, the bigger the savings you’ll receive by buying an annual ticket. However, many of us simply don't have that sort of cash lying around.
Below, we weigh up your options for financing this purchase. While an interest-free loan from your employer will usually be cheapest, there are other options if this isn’t available. And whichever option you choose, make sure you buy your ticket before the annual fare hike in January!
A lot of employers will offer to finance their employees’ travel costs with an interest-free loan or through a “salary sacrifice” scheme. Although it requires some administration (and capital) on the part of the employer, it can be a valuable way for businesses to entice and retain employees.
Before considering the options below, speak to your employer to see if they offer this service. Over the long term, it’s likely to be the easiest, safest and cheapest option. If your employer doesn’t offer this, consider asking the HR staff whether this is something they would consider adding as a benefit.
There’s a whole category of credit cards that includes introductory 0% interest deals in order to encourage customers to apply. With intense competition between banks to offer the longest 0% period, it’s even possible to bag yourself a card charging 0% for 2 years or more.
Obviously a rate of 0% is hard to beat, but there are a few provisos to consider.
First, you need to get approved for a card with a high enough credit limit – you’ll need a decent credit rating to be eligible for the market leading 0% deals, and the repayments would need to be affordable for you.
Secondly, you’ll need to be organised about how you use the card. The rate on the card will rocket after the introductory offer period, so it’s important to work out what you need to pay each month to stay on top of the debt. Card issuers only require you to make a small monthly payment, and it’s in their interests for the debt to continue as long as possible. There’s also a temptation to use the card for other spending.
If you can get your hands on one of these deals, you could finance your season ticket purchase at no extra cost.
If you can get approved for a loan with a competitive rate, this will allow you to pay for an annual ticket upfront, and spread the cost over 12 months. You’ll need to get the calculator out for this one, but if the total cost of the loan is less than the cost of 12 monthly season tickets (or 52 weekly tickets, depending on how you’d otherwise purchase the tickets), it could be a smart way to save money.
Bear in mind that if you move on to pastures new, you’ll still have the loan to pay off. If you think that’s a possibility, you should check out the early repayment terms of the loan you’re considering before applying.
Compare personal loans
With a commuter scheme you effectively take a loan from the scheme to buy an annual ticket, and then pay it back monthly. Like a loan from a traditional lender, your application will be subject to a full credit search.
Check that any scheme you consider is authorised by the Financial Conduct Authority (FCA) and weigh up the overall and monthly costs against the other options listed above. Again, you should check the cancellation terms of any scheme before applying, particularly if there’s a chance you won’t need the full year of travel.
Here are some of the key factors to consider when comparing your finance options.
If you’re considering using a personal loan to finance you season ticket, the eligibility criteria typically cover some or all of the following:
Even if you are deemed eligible by the lender, it’s up to you to ensure you can meet the repayments offered. Missed payments could incur a charge and could have severe consequences on your ability to obtain future credit. If you manage to get a loan through your employer, good news: the repayments will be deducted before your salary reaches your account, so you’re unlikely to miss a repayment.
Commuting may not be your favourite activity, but at least you can rest easy knowing it doesn’t have to cause you huge financial stress. If you put in a little work now to compare your options, you can feel smug in your seat on the train (provided you can get one) for the remaining 12 months!
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