A quick guide through holiday loans

A quick guide through holiday loans


Are you finally ready to treat yourself to the popular Turkish ice-cream vendors or just devour the famous Pho in Vietnam, watching the sunset in the backdrop? Dreams are bliss, and thankfully these days, you can actually live them.  

The new generation today, is aware of how easy it is to manifest their travel dreams in reality whether they have saved or not! The internet and technologies have also made all the processes right from planning to finances simple and accessible.

If expectations are not met at the speed of their thoughts by one organization, it is easy for them to move onto the next option. No one understands this better than e-commerce platforms, which offer multiple customized products to them. Even digital NBFCs have tailor-made loan products to meet their growing demands. 

Travel is no longer a trend, It’s a necessity for millennials. It provides them with enriching experiences, transforming their outlook towards their lives and careers. Families and managers, in fact, urge the younger generation to travel and explore themselves. However, if you don’t have enough savings that can fund your trips and you have dived in for a Holiday loan, ensure you keep few things in mind to have a hassle-free experience and to avoid falling into unnecessary debt traps later.

Finalize your budget first

First, when you begin to plan your holiday, you need to consider the amount you really need to borrow. This amount can be calculated keeping in mind your flight tickets, accommodation and also the cost of activities you will be keen on taking up at your holiday destination.

For example:  If you plan a trip to Andaman and Nicobar Islands, you just cannot miss enjoying the white-sand beaches and water sport activities such as snorkelling and more. Adding a backup amount for last-minute/unforeseen expenses should be taken into consideration while you arrive at your travel budget. Also, if you have taken a loan, try and minimize the usage of credit cards as it leads to multiple debts.

Holiday loan that offers flexibility may come with interest-only payment option for the first three months, which gives some comfort to the borrower. In such an option, the instalment is up to 40% lower than regular EMI based loan.

Post third month, regular EMI is to be repaid. You can choose the repayment amount period, ranging anywhere from 6 months to 12 months.

Be mindful while you choose your payment schedule (tenure), since that will be a monthly commitment you will be making, thus, taking account of your fixed obligation to income will be helpful. It should not exceed 45-50% of your net monthly salary. 


The good thing about taking a travel loan is the minimal documentation it requires. However, ensure that all required documents are submitted at one go to avoid any delay in loan processing and sanctions.

As you would have already budgeted and planned your holiday, you would like to get financial assistance faster, and therefore it is important to finish all the formalities in one go. 

Research well

While doing your research for the right holiday loan, check terms and conditions of lending institutions like prepayment possibilities, the flexibility of loan product and monthly tenure of the options of holiday loans.

Also, some sites allow you to check your provisional eligibility even before you apply for a loan. This decision needs to be made keeping in mind your financial capabilities as well as personal and professional circumstances, be it a job change in the upcoming months, or a newborn in the family etc.

Do not be greedy

Borrow exactly what you need. Even though it is not easy to calculate for holiday loan but being on the conservative side helps. It’s very easy to get carried away and spend in surplus.

But, remember, there’s a world out there waiting to be explored and one destination won’t satiate your travel cravings, ever! So, make sure that your holiday loan covers exactly your vacation expenses. Also, making minimal usage of credit card also saves you from high-interest loan and avoiding a debt trap. Financial discipline always comes with good financial planning! Stop shying away from fulfilling your dreams.

A travel loan is easier than ever, so get ready, it’s time to explore the world! 

(The writer is CEO and Co-Founder, LoanTap)

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