A Personal Loan for the purpose of financing a vacation or travel in India or abroad is known as a Travel Loan or a Vacation Loan. Both public and private sector banks are constantly making attractive travel loan offers to their customers with a view to making their travel experiences worthwhile.
When and why should you take a Travel Loan?
The following are the reason to take a Travel Loan
- You are keen to enjoy life with your loved ones and no longer want to postpone your holiday plans due to want of immediate funds
- You are reluctant to spend lump-sum money on luxury vacation expenses
- You are not willing to liquidate your savings and lose interest income on long term savings instruments such as Fixed Deposits, NSCs to spend on your holidays
- Pan Card Number
- Passport Photo
- Address Proof
(Valid Driving License / Valid Passport / Aadhar Card)
- ID Proof
(Valid Driving License / Valid Passport / Voter’s ID / Aadhar Card / Pan Card)
Options to avail Loan for Travelling
Travel companies such as MakeMyTrip and Yatra.com offer travel loan packages through their websites to customers by partnerships with banks and credit card companies. However, experts suggest borrowers should check other options and deals offered by banks directly on their website or from Fintech companies and online loan providers.
1. Personal Loan from Banks
You can take a personal loan up to Rs 5 lakh, which also depends on your loan eligibility and subject to the limit of actual travel expenses. You can also enhance the holiday loan amount by offering the security of liquid instruments such as Fixed Deposits, Kisan Vikas Patras (KVPs), and National Savings Certificate (NSCs). These loans are also easy to process and come with minimal paperwork. The tenure of these loans ranges from 3 to 24 months. Depending on the lender you opt for, the interest rates of these unsecured loans vary, and range between 11 to 20%, with a loan processing fee of 1-3%. The interest rate on personal loans offers a lower interest rate than credit cards.
2. Credit Card based EMI Loans
Use your credit card during your travel and convert the outstanding amount to a credit card EMI loan. As these loans are with your existing credit card, they have no or minimal paperwork. These loans, however, charge relatively higher interest rates compared to personal loans. The interest rate ranges from 24 to 36%. The tenure of these loans ranges between 3 and 12 months. Unlike personal loans, the eligibility of the loan amount is limited to the credit limit on the borrower’s card and also on the destination of travel.
As you opt for a travel loan, not only do you make your travel dreams come true but enjoy some benefits as well. The fixed interest rate keeps your repayment amounts the same and makes it easier for you to budget your vacation. It also gives you a clear repayment structure because you exactly know when end date has been set and the financial commitments that come with it.
Best Travel Tips
- Eat the local food
- Learn a few words of the language in every country you visit
- And a stash of emergency cash
- Back up everything in multiple places
- Have a routine when checking out of a place
- Have a health checkup before you leave
- Scan your important documents and email them to yourself
- Travel slow to save money