The daily struggles of a job and other responsibilities can sometimes be too stressful. And even a balanced personal-professional life can eventually lead to some boredom.
In such situations, travel serves as a great way of getting a break and a fresh perspective on life. Besides that time away from home helps you to really bond with your family and friends. Moreover, a vacation by yourself can be a great way to even reconnect with yourself.
All these things make travel and tourism an extremely popular option. But of course, this has a cost associated with it. Be it for your flight, hotel bookings, food or other travel experiences, each factor has a significant impact on your budget and finances. Hence in such a scenario, a personal loan for travel or vacation serves as a helpful solution.
Travel loans Overview
These are personal loans given by various banks and financial institutions when a person wishes to travel for a business or personal purpose. Usually, such loans are unsecured, meaning that you are not required to give any asset to get the loan amount. Moreover, any guarantor is also not required. But in the case of amounts exceeding INR 2 lakhs, some collateral or a guarantor may be required.
These loans can be availed for foreign or domestic travel and include the cost for you and any relatives, who are considered as dependents. And the loan amounts given for domestic travel is usually less than that given for foreign travel.
Also, senior citizens can avail better interest rates according to various schemes offered by a bank.
You can get a travel loan for amounts ranging from INR 10,000 to even around INR 20 lakhs. But since these loans are unsecured, they have a higher rate of interest associated with them. This is done by the lender to reduce the risk of giving a loan without any collateral involved. The interest rate can currently be around 10-11%.
Additionally, loan tenures can vary from 12-60 months, and the processing fee charged differs for each bank.
A salaried or self-employed person can apply for this loan. A minimal document for Personal Loan list is involved in such loans. This includes your address details, identity proof (election card, Adhaar card etc), and passport photographs.
Along with these, you are also required to submit details of your travel. Such as flight tickets, hotel booking, travel plans and so on.
Here are some of the advantages of taking a travel loan:
- There are lesser chances of a travel loan reducing your credit score. Because unlike a credit card, a personal loan has no effect on the credit utilization ratio. According to this ratio, a person’s credit score is penalized if the card balance goes above 30% of the credit limit.
- By knowing how much you’ll be paying in EMIs, you can properly structure your finances. Also, these loans can come with more flexible tenures.
- The processing of such loans takes less time and does not involve any complications.
- For some banks, it is also possible for you to make prepayments on the loan.
Before getting a loan it is easily possible for you to compare the terms offered by different banks and choose one that best matches your needs. While it is, of course, important to get the best travel experience you will also need to evaluate its impact on your finances.
This is where smarter planning can make a difference. For e.g. the rates for accommodation in Goa can be significantly different in the peak season vs. any other time. Also booking a flight ticket earlier can help you save on your costs.
So get to properly planning your vacation – both in terms of what you wish to do and the finances involved.