PUNE: Vacation-related expenses have been soaring and many are now opting for personal loans for travel. “Everything has become more expensive post-pandemic. Flights, hotels and even food has become costlier. We took a loan in January this year for our trip to the US. The trip cost us about Rs 6 lakh for four of us,” Rishi Sharma, a resident of Sopan Baug, said.
Mahesh Sawant was trying to book a tour to Europe online via tour operator Veena World. He saw standard and no-cost EMI options, starting around Rs 14,000 per month. “Many tour portals are offering travel now, pay later options in collaboration with NBFCs and travel fintech companies. It seems like a good option and I may opt for it,” he, said.
A survey conducted by Paisa bazaar last year showed that 20% of people who took personal loans between Jan-June 2023 used them for travel related expenses. There was a sharp rise in vacation loans between April and June and over 70% of people who took these loans were salaried employees.
“A personal loan can be used to fund any kind of expenses like home renovation etc, but based on experience, most people who plan to use the loan for travel usually borrow ahead of summer/Diwali vacations. Demand usually spikes during January-February or June-July so that they can plan their vacations in advance,” said a banker who did not wish to be named. Owing to options like digital banking, personal loan disbursements are also happening via apps or websites. For Bajaj Fi nance, personal loans disbursed on the app grew from Rs 9,400 crore in FY23 to Rs 11,700 crore in FY24.
Satyam Kumar, co-founder and CEO, Loan Tap, said that they have seen a 37% year-on-year growth in travel loans. “Travel loans continue to be one fifth of the personal un secured loan market in India. The category had seen a significant surge in 2023, but growth has been a bit muted this year. This is because the cost of personal loans has gone up and that has had some impact on growth for the industry in this category. People have been doing large travel bookings on card, which are then getting paid off in an EMI format,” he, said.
Abraham Alapatt, president & group head, marketing, service quality, value added services and innovation, Thomas Cook India Limited & SOTC Travel, said, “We are witnessing a significant shift in consumer behaviour with Indians moving rapidly from traditional savers to spenders, and with new and/or easy access to financial models resulting in ready availability to travel funds, our volumes on loans applied/disbursed have seen a surge of over 200% post-pandemic.”
Travel booking portal EaseMyTrip saw high adoption of travel now-pay later services for domestic travel and by consumers in the age group of 22-32 years. Rikant Pittie, cofounder, EaseMyTrip.com, said, “We have seen a 4X increa se in bookings on its platform in 2023 as compared to 2022, because of more integrations of players such as Simpl, MobiKwik ZIP and others etc took place in 2023. EaseMyTrip has already started receiving EMI requests for Diwali/December trips.”
Anuj Jain, founder, Wander Womaniya, a tour company which organises tours for women, is receiving many queries from people asking for travel EMI payment options for trips. “We do get a lot of people asking for travel EMI payment options. At present, we have an option for blocking the seat by paying a partial amount, but we take the full payment before the trip. We are considering an EMI payment option. We want something that is quick as we don’t want to delay customer booking due to this additional step,” Anuj Jain said.
