Be it an international tour or a short road trip, travelling has always excited people with a sense of adventure and exploration. Particularly in India, the population is dominated by Millennials and Gen Z, who are generating a new surge in demand owing to their pent-up travel aspirations stemming from the pandemic. With exciting propositions like sports travel, sailing on a cruise, travelling in caravans and experiencing different cultures coupled with the excitement of the holiday season, Indians are all set to plan their next big vacation.
Budget is a very big criteria when planning a trip and does cause a dip in savings, however, nowadays, people are increasingly opting for the smart way of funding their vacation with a personal loan offered by NBFCs!
According to India Brand Equity Foundation, the travel & tourism sector contributes US$ 178 billion to the GDP which is expected to reach US$ 512 billion by 2028. The industry’s direct contribution to the GDP is expected to grow with more and more people opting to travel on credit resulting in the travel or vacation loans segment growing at an unprecedented pace.
Also Read: Not In Thousands, Here’s How Much Indians Can Spend On International Vs Domestic Travel
Let’s unravel how personal loans make travel easy, convenient and destress your pockets.
Unlock your dream vacation with a travel loan
A travel loan is an unsecured personal loan that can be leveraged to fuel your dream vacation. The loan gives you access to immediate funds and flexibility of repayments. These loans can be used to cover all your vacation expenses ranging from transportation, stays, dining, and shopping.
As an unsecured loan, it provides substantial financing without the need of providing any collateral while offering attractive interest rates, quick processing, simple eligibility criteria and zero foreclosure charges which have made travelling easy and convenient.
Here are some of the major benefits of funding your trip with a personal loan-
Travel now, pay later
Accumulating enough money to fund a travel plan may take longer depending on the trip destination and duration. To save time, people can apply for small ticket loans to cover the cost of the trip. Moreover, flexible borrowing limits that can be tailored to meet the needs of every individual borrower makes travel loans even more attractive.
Better planning and budgeting
Most of the time, when travel budgets are neglected, people end up overspending. Hence, with fixed monthly plans and systematic repayment cycles, a small loan can be an efficient way to stick to the travel budget.
Choosing travel loans over credit cards
Personal loans for travel can be a good alternative to credit cards. These loans can be availed at a lower interest rate than credit cards depending on the borrower’s credit score. Additionally, they are also easier to obtain than other loans.
Building a good credit score
Funding your travel with readily available money will only exhaust a person’s bank balance. However, by opting for a loan, borrowers can build up their credit scores as well. Making timely payments of the outstanding debt can help build their credit score as lenders typically report the payment record of all customers to the three major credit bureaus.
Digitisation makes travel loans more accessible
One of the key advantages of availing a personal loan from a digital lender is that they typically have a quick disbursal process. This indicates that the end-to-end process from the online application to approval, and disbursal of funds take place effectively in a relatively short amount of time. Furthermore, the simple eligibility criteria of being a salaried employee further speed up the sanction and disbursement.
The potential of travel loans
Travel loans are becoming popular by the day in a diverse country like India which harbours the world’s largest young population and has attractive cultures, cuisines and landscapes. With more millennials opting to travel on credit, the travel loans segment is growing faster and more profitably than others. Evolving lifestyles and changing consumer priorities followed by modern and traditional travel formats like religious travel, increasing foreign tours, modern trends of backpacking, weekend trips, etc. are positively impacting the travel loans segment.
Scope for a revolution
Just like NBFCs revolutionised the consumer durable loan segment over the last decade helping aspiring Indians purchase electronics and furniture like flatscreen TVs and smartphones, the same is expected to unravel in the travel category. Banks and NBFCs are at the forefront of enabling customers to get travel loans with ease and without saddling them with high interest rates for financing their travel.
Going forward, personal loans have the potential to become the much-needed catalyst for the travel industry. The evolving lifestyle and consumption patterns of the Indian demography and people’s constant need to unplug from the push and pull of daily life will give this segment a major push.
-The author is MD, Poonawalla Fincorp. Views expressed are personal.
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