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Planning for a Travel Loan? Here are 6 things you need to know

By   /  May 28, 2024  /  Comments Off on Planning for a Travel Loan? Here are 6 things you need to know

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Planning for a Travel Loan? Here are 6 things you need to know

Vacations are not always planned, as sometimes we randomly prepare an international or domestic trip with our spouse, friends, family or even colleagues. Many times, we don’t have sufficient funds to spend right away for travel purposes. Therefore, to cater to our needs for both domestic and international travel, various financial institutions offer travel loans or holiday loans. Travel loans help in availing funds at ease without over-utilizing your credit cards.

A travel loan is an unsecured loan, wherein you are not required to submit any collateral or security with the lending institutions, be it aprivate or public sector bank, NBFC or a Micro Finance Institution.

To avail the best loan product among available loan options, you must have a good CIBIL score along with a healthy credit report. For this, firstly you need to check CIBIL score that is available online at various web platforms for free. You can apply immediately if the score is above 750 or you should try to improve it, if it is below 750 out of 900. Let’s discuss various things to consider while applying for a travel loan to make it easier for you to plan your desired destination.

Things to consider when applying for a Travel Loan

Read on know some of the key essentials, if you are planning to take a travel loan:

Check your existing finances

Prior to opting for a travel loan, do check your present financial obligations and liabilities. These may include your existing loans, credit card usage, house rent, household expenditure, investments, etc. Make sure that you would be able to repay the loan EMIs from your monthly income without any fail.

Take funds only as per your travel needs

While planning for a vacation, you should borrow funds only as much as required, as additional funds can lead to unwanted expenditure. Borrowed amount should be as per your repayment capability and not exceed it. Therefore, make sure that your loan amount is apt for your vacation’s expenditure.

Check and compare the interest rates

Usually, a travel loan ranges from Rs. 10,000 to Rs. 40 lakh with interest rates ranging from 10.50%-25% p.a. The interest rates shall vary from lender to lender so before applying for a loan, do check and compare the interest rates offered by lending financial institutions. Based on the interest rates, your loan EMIs shall be decided by the bank or NBFC.

Keep the required documents handy

Ensure that all the mandatory documents are ready before applying for a holiday loan. Some of the important documents include the following:

For Salaried:

  • Duly filled application form with passport-sized photographs
  • Identity Proof
  • Address Proof
  • Bank Statements
  • Salary Slips

Additional Documents may include income proof, VISA (if international travel), air tickets, hotel bookings, trip itinerary, travel insurance, etc.

Note: The documents required for self-employed professionals and not yet employed shall vary from lender to lender.

Choose your repayment term judiciously

Your loan EMIs that you need to pay every month and each year shall be determined by your chosen repayment tenure. Usually, the repayment tenure on holiday loans ranges from 12 months to 60 months. Longer repayment tenure shall lower down your monthly EMIs and vice-versa. Also, check the prepayment options, if you plan to pay more in less time.

Read the loan agreement details cautiously

Before signing any loan document, it is recommended to read the loan agreement thoroughly. By reading all the terms and conditions, you would be much aware of all the penalties, and fees and charges applicable.

Features and Benefits of Travel Loan

Below stated are some of the key features and benefits of travel loan:

  • Instant approval and disbursals within hours
  • Interest rate: 10.50%-25% p.a.
  • Loan amount: Up to Rs. 40 lakh
  • Repayment tenure: Up to 60 months
  • Pre-approved travel loan for selected customers
  • No guarantor or collateral/security required
  • Hassle-free application process
  • Minimum documentation

 Key Takeaways:

Travel loans are one of the most convenient methods of availing funds without much documentation. Check and compare from various loan options available to get funds at lower interest rates and longer repayment tenure to ensure flexibility in paying off the loan within the decided time period. Make sure not to borrow excessive amounts, as it may over exceed your budget and result in unwanted debt. Furthermore, keep a regular check on your credit report to resolve errors, if any. If required, you may consult your financial consultant before taking any informed financial decision regarding a travel loan.

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