- High interest, fees, and GST make loan repayment expensive.
Travel loans are one of the fastest-growing personal loan categories in India right now. Most banks will make them sound like a simple and cheap solution. But the financial burden that the loan will put on you continues long after your return flight.
What is a Travel Loan
It is an unsecured personal loan that you take to fund your trip. Unlike a home loan or car loan, there is no asset backing it. You borrow, you travel, and you repay, usually over six months to three years.
Because there is nothing for a lender to recover if you default, the interest rates are significantly higher than those of secured loans. The gap between what you borrow and what you repay ends up being higher than most people think.
Also Read: Fuel Shock Hits Air India: Flight Cuts, Lower Bonuses, And Furloughs In Consideration
The Real Cost Nobody Talks About
Apart from the extremely high interest rates, you have to factor in the interest, processing fees, and GST on charges. What seems like a modest loan can end up being a steep expense that you did not account for. The longer your repayment tenure, the more you silently pay.
Unlike a home loan, where you own something that appreciates, a travel loan will leave you with memories and a monthly EMI that messes up your monthly budget.
Who Is Most at Risk?
Travel loans hurt first-time international travellers, newly married couples booking a honeymoon or a family going for that once-in-a-lifetime trip. These people have a genuine intent but underestimate the repayment pressure, especially when life intervenes.
A travel loan sitting on top of a job change, a medical bill, or an unexpected expense can quickly become unmanageable.
Also Read: Zero-Cost EMI Isn’t Truly ‘Zero’: What Buyers Need To Know
Smarter Alternatives Worth Considering
The most straightforward alternative is a travel credit card with a zero-cost EMI option. You can spread the cost without paying interest, provided you clear dues on time.
The better long-term habit is a dedicated travel SIP. Even a small monthly contribution into a liquid or short-term fund can finance a decent trip within a year without borrowing a rupee.
If the trip is non-negotiable and you need to do it soon, you should cut trip costs before you take a travel loan. A shorter itinerary with no debt is almost always a better decision.
