As the majority of the world becomes vaccinated against COVID-19 and comfortable with travel, you too may find yourself daydreaming of a family vacation or a weekend trip with friends. However, you may not always have the funds to fulfill your travel plans. Before you think of canceling your plan because of a shortage of finances, familiarize yourself with the benefits of a personal loan for travel. A vacation loan can come in handy to completely or partially fund your trip without feeling like a burden, as it can help cover everything from transportation and accommodation to food. How does a personal loan work? The person in need borrows a sum of money from a lender under the condition of repaying it in installments along with interest within a set period. The interest rate can be high or low based on the borrower’s credit score and other factors like income level, employment history, repayment capacity, etc. When should you take a personal loan for vacation? Well, if you haven’t been able to save up for a planned vacation, an instant travel loan can come in handy. They are quickly disbursed and require minimal paperwork, which is ideally suited for the following situations:
- Arranging cash for an unavoidable last-minute trip.
- Partial funding of the trip if your savings don’t match up to your vacation budget.
- Finding funds for a once-in-a-lifetime travel opportunity is difficult if you don’t have the means.
- Arranging extra cash for a trip that needs to be extended due to unforeseen circumstances.
What should I do before taking out a travel loan? Once you have a travel plan and budget in place and have made up your mind to take a personal loan for your holiday, here’s what you need to do:
- Explore lenders
The terms of a personal loan can vary from lender to lender. Hence, it is important to research and compare the interest rates, repayment terms, processing fees, etc. to find a lender that suits your needs. For example, MoneyTap, India’s first personal line of credit, offers travel loans with instant approvals and a credit line of up to INR 5 lakh.
- Assess your eligibility.
There can be different criteria for the approval of travel loans in India. The basic checklist usually includes age, work experience, income, employment stability, etc. Excelling at all conditions will help improve your eligibility and make the borrowing process smoother. Eligibility criteria and documents While your chosen lender’s website will ideally give you the process and documentation details for taking a travel loan in India, here’s a quick look at the basic documents you would need to submit:
- Duly filled and signed application form
- Identity proof
- Residential proof
- Income proof
- Citizenship proof
Benefits of a personal loan for travel There are many pros to using a vacation loan:
- Instant approvals
Once the application is through, the approval process does not take long, thanks to digitization! And after the approval is complete, some lenders can even provide the loan amount within 24 hours. This could be especially helpful in funding last-minute trips.
- Nominal rate of interest
A holiday loan may let you borrow money at a lower rate of interest, depending on your credit score and other financial factors. This makes the EMI affordable and the repayment more cost-effective.
- Flexible tenure
You can opt for a suitable repayment period based on your financial capacity. A long tenure means affordable EMIs and less stress, whereas a short tenure means a high EMI amount but earlier clearance of the financial obligation. While taking a personal loan for a vacation can help you enjoy your dream holiday without any burden, there are certain financial tips to help plan your travel better, for example, budgeting, getting travel insurance, keeping your bills clear, etc. With an overall solid financial travel plan, all you need to do is decide your dream destination and make great memories! Author Bio: Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India’s first app-based credit line. Shiv is a true finance geek, and his friends love that. They always rely on him for advice on their investment choices, budgeting skills, personal financial matters, and when they want to get a loan. He has made it his life’s mission to help and educate people on various financial topics, so email him your questions.
