A personal loan for travel is a loan that can be used to fund travel costs. A travel loan is also known as a tour loan, tourist loan, or holiday loan.
Many people wish to take a vacation abroad. But they may lack the money to do so. However, they can plan lavish vacations without eroding their savings by using travel loans. Travel loans are usually for a short period. Many banks offer them as personal loans because they are unsecured loans that the person can use for travel-related expenses.
The interest rates on travel loans can differ from one lender to the other. Some banks offer low-interest rates to make saving money more feasible. On vacation or travel loans, a guarantor is not needed.
Technology has made the loan application process fully online. The person can now submit a loan application from the comfort of their home and have the amount sent to their account.
Why is a personal loan for travel a viable option?
- Personal loan funding is a quick process. So, for last-minute travel plans with family and friends, taking out a personal loan for travel will save one a lot of time.
- It’s simple to budget, which means one will know exactly how much money they will have to pay back as EMIs and how long the loan will last.
- It is an unsecured loan. This means one does not have to put the home or valuable items up as collateral to get the funds.
How to apply for a loan for travel
These are some steps to follow to apply for a personal loan for travel:
Select the destination
The first and most crucial step is to select the destination carefully. One should check if they have enough money and plan for travel finance. It would be unwise to select places that would require one to rely solely on a travel loan. One should check that the destination’s hotel, travel, and food prices are not too high.
Research the destination
After one has decided on their destination, they should carry out research online. They should learn more about the specific areas they want to cover and how they plan to cover them. One should check the currency value, internal transport system costs, and other details.
Plan a budget
The next step is to create an estimated budget based on the research. The person should decide all of the costs he will incur. A personal loan for travel must cover the costs of flight tickets, hotel stays, daily meals, internal transport, and sightseeing.
For convenience, one can go to a travel agent and get an estimate for their total travel cost. It is often a good idea to add a 15% buffer to the estimated cost because the actual cost will be higher than what one initially estimated.
Check available funds
Now that one has a rough estimate of their travel costs, they should figure out how much they can contribute from their funds. The rest of the funds can be obtained through a loan for travel.
Apply for a personal loan
With the trip details, estimates, and an idea of how much money one will need, one can go to a bank branch of their choice and apply for a loan for travel instantly. One should submit their loan application with proper documents such as Income Tax (IT) returns, bank statements, Aadhaar, PAN, and so on.
Receive the money
The bank will approve the loan and transfer the requested amount once one’s credit score has been approved. Once one has the funds, one can begin working on making the dream a reality. They should book their flights, make hotel reservations, and try to pre-book everything they can so they know how much money they have for the rest of their travel funds.
Things to consider before taking a loan for travel
Here are some things to keep in mind before opting for a loan for travel:
- The person should set a limit on the amount of money they think will be enough to cover vacation costs. This will reduce the chances of spending more.
- One should secure a loan for travel according to their ability to repay. There should be a clear trade-off between the cost of the itinerary (including food, lodging, and so on) and the loan amount. As a result, spending beyond the means during the vacation will stretch one’s monthly budget. It will also increase their chances of defaulting when it comes time to repay.
- The person should keep the loan term as short as possible. A longer-term means higher interest. Also, one may need extra funds in the future for a vehicle, medical funds, or a home. In that case, their overall eligibility may suffer.
- One should check for full and partial prepayment clauses if they want to pay off their loan sooner rather than later. Many lenders charge penalty fees (up to 5% of the balance plus service tax), while a few lenders do not allow people to prepay personal loans.
- The person should check the repayment plan before signing up. Some banks need a certain number of EMIs before one can make a pre-payment.
The thing to keep in mind is that trips are not cheap these days. As a result, it is advised that one should have enough funds.
A personal loan may be a viable option if the vacation costs more than the current savings. But one should keep in mind that it is critical to use the funds wisely. One should have a repayment plan in place in advance to enjoy that dream trip with their loved one.
With a personal loan for travel, one can do what one wants without worrying about the costs. In India, many lenders offer instant approval for travel loans.
These are mostly trouble-free, as they don’t need many documents. Also, lenders are ready to offer budget-friendly EMI plans that will never leave a dent in one’s wallet. One can pay with cash, a credit card, or a check, depending on their choice.
One can visit the Piramal Finance website for more information related to personal loans for travel. They can also explore their products and services.