Travel Loan

Introduction

More and more Indians are going for holidays in India as well as outside India. This is partly the impact of Hindi cinema and globalisation where the world has become a global village. This has also been added by satellite television where the images of exotic holiday destinations are beamed 24 hours.

Travel loans are provided by banks and Non-Banking Financial Companies (NBFC). Some of the tour and travel operators also provide their customer with the facility to pay the cost of the holidays in easy instalments.

Travel loan generally is a species of personal loan. Some lenders have products specially named after travel needs of the borrowers. Other lenders do not have any product specifically designed for travel as such but provide personal loans to cover the travel cost

The rate of interest and tenure

Since travel loans are a species of personal loans the rate of interest charged on the travel loans is generally the same and is in the range of 10.99% p.a. to 24% depending on the overall profile of the borrower.

The leading lenders providing the travel loan

Though all the lenders do not provide the travel loans there are certain lenders who provide loans to meet the cost of inland travel as well as abroad. The travel loan covers the cost of the tickets as well as the cost of the lodging and boarding during the holidays.

ICICI bank provides personal loans for holiday up to 20 lakhs rupees with interest rate starting from 10.99% p.a. without having to provide any security to the bank.

Tata Capital also provides travel loan for a period as long as 72 months with an option to part prepay it after completion of 12 months. The maximum amount of travel loan which you can avail from Tata Capital is higher at 25 lakhs rupees. A salaried as well as self-employed can avail Tata Capital Travel loan. For being eligible, a salaried has to be between 21 years and 58 years and must be earning a minimum of twenty thousand rupees per month. For self-employed, the eligibility is lower at two lakhs rupees annual income with the age bracket expanded between 25 years to 65 years.

In addition to ICICI bank and Tata Capital other financial institutions like HDFC Bank, Axis Bank and Bajaj Finserv also provide travel loans under the category of a personal loan without you having to provide any security with shorter processing time.

In addition to the above lenders, some lenders provide specially tailor-made travel loan. One such lender Federal bank offers a product called “Shubh Yatra” to meet your travel costs. It provides travel loan up to Rs. 3 lakhs which include the costs of Train / Airfare, hotel stay, other conveyance cost and other expenses of travel. The bank levies a small processing fee @ 0.50%. The Shubh Yatra travel loan can be repaid in a lump sum or through Equated monthly instalments depending on your convenience without any prepayment penalty.

Should you opt for Travel loan

There are times to do certain things without postponing them. The pleasure of travelling is one of them. You can plan your holidays or honeymoon even if you do not have the funds available. You may earn and have money in future but the honeymoon holiday will not come again. Likewise travelling with your children during the vacations should not be postponed to a later date just because of the shortage of funds at that time.

You have other alternatives also like credit cards to funds your travel plans but then borrowing on credit cards is costlier. You can always avail the travel loan at relatively cheaper rates. Since the repayment period available for travel loans is generally up to 60 months, you can comfortably repay the amount of the travel loan without postponing the pleasure of having holidays to a destination of your dream. Travel loans help you amortise your travel cost over the loan tenure in case you feel that accumulating such huge amount in near future seems difficult as money finds its way out easily.

How to estimate your Travel Loan amount?

Since the money borrowed on travel loan bears higher interest, it is important for you to correctly estimate the amount of travel loan you should apply for. In case you are planning to book your travels through tour and travel agents, it is easier to estimate the cost than in case you want to go at your own. In case you are going through an agent, you can get an estimate of all the expenses from the agent. The amount charged by the travel agent may not include all the expenses like sightseeing, shopping, adventure rides etc., which you need to provide for separately.

In case you are planning to go at your own, the task becomes a little difficult as you have to break down the costs with minute details possible. This will include airfare/train fare, visa fee, cost of local conveyance, lodging and boarding charges.

You have to give more attention to details so as to ensure that the estimate of the travel costs is made correctly. For taking estimates of the cost of various items at the destination place, you can carry out research of various travel guidebooks and travel website. You also need to prepare a detailed budget for your travel plans so as to ensure that you do not face the shortage of funds and thus having to curtail your holidays or the activities which you wish to undertake.  It would be ideal if you make a daily budget with break up of all the items of expenditure. Please have a buffer of at least 15% to 20% on the estimates made by you as you are bound to miss out on certain expenses. It will also take care of cost escalation during the period intervening between budgeting and actual date of travel.

Once the detailed budget of the entire travel plan is made, you have to ascertain the funds available with you to find out the exact amount of travel loan you need to take.

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