Sarbajeet K Sen
The summer holiday travel season is fast approaching. Most of you would have already firmed up your travel plans and booked tickets for a little fun and some cooler climes, be it within the country or abroad. But are you of those facing a cash crunch that’s forcing you to put your family vacation plans on hold?
Well, there is help at hand. There are various travel finance options that you can avail of that would allow you to join in the fun. You can pay your dues to your lender once you are back.
“There are multiple finance options to fund one’s holiday travel. Personal loans has emerged as the most popular option among travelers since it is extremely easy and convenient. With instant, online approvals and quick processing, the loan amounts are disbursed by banks within a few days. Some banks and NBFCs have also started offering a specially branded variant of personal loans called travel loans. However, the features and benefits of these are almost identical to personal loan,” Naveen Kukreja, CEO & co-founder, Paisabazaar.com told Moneycontrol.
Of course, you can also use your credit card to fund your holiday as they allow interest-free period of 20–55 days for repaying dues. You can also convert these dues into EMIs for easier repayment. “Alternatively, you can also take a loan on your credit card. These are generally pre-approved loans offered by credit card issuers on the basis of the type of your card, spends on that card and your bill repayment history. Disbursal on these loans is usually faster compared to other types of loans and sometimes are provided without documentation,” Kukreja pointed out.
If you seeking cheaper options, you can try getting loan against fixed deposit or securities such as shares, bonds or mutual funds. “If we go a little deeper, secured loan against FD and gold can also be an option in addition to the personal loan/credit card. The loan amount here could be contingent to the value of the underlying savings/deposits,” says Rishi Mehra, CEO of Wishfin.com. However, he says this options should come last on the list.
Mehra advises using part of savings to finance leisure travel, instead of going for full financing. “If you have good savings or can manage your leisure expenses without taking any finance, nothing is better than that. Use it to reduce your repayment burden. But if you don’t have enough finances to fund your leisure needs, go for a loan but make sure to check and compare the rates being offered by various lenders to crack the best deal,” he said.
Availing finance involves fees and charges such as a one-time processing-fee, prepayment charges. While interest rates depends on applicant’s profile, it is generally above 11% per annum and can go substantially higher depending on the option you opt for. Usually, lenders charge a processing fee between 1.50-2% of the loan amount, while prepayment charges range between 3-4% of the principal outstanding.
Here are how interest rates and charges for travel loans stack up:
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