Should you borrow loans from fintech? How to plan for your favorite holiday destinations smartly
Travel loans are in demand, however, they are still outrun by personal.
Loan from fintech firms: There has been a major boost in travelling sector during the summer vacation. A research carried by ClearTrip revealed that family holiday bookings continued to remain robust, while there was an uptick in short-haul destinations during this season. Also, more than 70% of Cleartrip users booked their trips more than a month in advance, while those who booked within three to four weeks window before their travel dates accounted for around 10.65%. With that, travel loans were also in demand. However, travel loans are still outrun by personal. This brings us to the question whether it is wiser to opt for travel loans for visiting favourite holiday destinations.
Aditya Kumar, Founder & CEO Qbera.com highlighted that, of the total number of applications received, roughly 5% of applicants have availed travel loans. The average ticket size for travel loans is 1.65 lakh, and of the roughly 28% of applicants who've applied for travel loans have cited "International Travel" as the purpose for their loan.
Kumar highlighted that current trends have suggested that the number of people taking out personal loans for international travel has spiked, while the total number of travel loan applications has seen a slight downtrend from the previous year. That said, personal loans for travel are still very popular among loan applicants, especially among applicants in the 25-32 years age segment.
"Many a time, individuals opting for wedding loans often go in for higher loan amounts if they intend on traveling as well," said Kumar.
Meanwhile, Anuj Kacker, COO & Co Founder MoneyTap reveals that fintechs have become a one-stop solutions for travellers.
Kacker says, "Impromptu travel plans mostly fall through due to unavailability of quick cash. Which is why young professionals increasingly depend on fintech firms to finance their getaways without having to worry about disturbing their monthly cash flows.This trend has picked up the pace for the past few years."
According to Kacker, multiple factors have resulted in the rise of popularity of fintech platforms. First of all, they provide users with paperless, presence-less and hassle-free borrowing experience. In addition, they process loan requests in a matter of minutes. Further, the interest rates charged by fintech firms such as MoneyTap can be as low as 13% per annum (1.08% per month), which is lower than most personal loan offerings as the interest is charged on reducing balance. Moreover, the interest is charged only on the amount used, not on the total approved limit. Interest on a small loan amount, borrowed for 2 months can be as low as INR 70-250, which is a very convenient option for young salaried individuals.
Thereby, Kacker says, "Another benefit that travel loans offer is that young professionals can go on trips without bearing the burden of significant upfront investments. They can borrow a one-time bulk amount from fintech players and repay it in affordable EMIs over time."