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We dream of travelling to gorgeous locales and far off destinations, yet our finances do not support us all the time. Then again, many a times we need to travel out of necessity. The trip becomes unavoidable. Finances may not support us at that point in time. We usually take loans to be able to buy a house a car or to further our business, but at times we need to avail loans to meet our personal or recreational needs. We might need a loan to travel. To fund our own honeymoon, go for a family wedding that we cannot miss, the trip might also be for medical tourism purposes. It is here that online personal loan come as a saviour.
What are Personal Loans?
Personal Loans are fairly easy to apply for and procure. It is usually an unsecured loan and can be used for any purpose that you require including a vacation or a trip. You could buy air tickets, hotel stay and use it as spending money in the destination you are headed to.There are some banks and NBFCs which have travel specific personal loan options. These can be secured loans too. Here the processing fee is lesser; the maximum loan amount can also be lesser. The other advantage is that the interest rate on such travel loans is lower than that on personal loans. Personal loan interest rates can touch up to 24%!
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Is it wise to take a personal loan for travel purposes?
It is always advisable to avoid taking a personal loan if you have the funds available. Why unnecessarily pay for the EMI interest if you have the cash on you. The other factor is you need to ensure that your monthly pay is enough to be able to take care of daily expenses and pay off the EMI in a comfortable manner. It your net monthly savings are going to be stretched then you need to rethink applying for that personal loan.The EMI that you pay should not cross 40% of your net monthly income. Instead of taking a loan you could either redeem a fixed deposit or a debt fund since their returns would be lower than the interest you will end up paying.
You could also use a credit card to make the payment for your travel in case you need to make an immediate payment. You get a window of a month at least to make the repayment. You could convert your credit card payment into EMI’s too. The interest rate for credit cards is high though and can go up to 25%.
You could even use a security as collateral and take a loan against it. If you have a long term investment that can be used as a loan then you can look at that as an option since the rate of interest here is lower than a personal loan.
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