Times are changing as people are planning their travel and vacations just like they plan their investments. Today’s generation is smart and includes frequent vacations to take the load off their hectic lifestyle. However, travel expenses involve funds, thus, prompting millennials to seek loans to fund their travel.
Financing Travel with a Loan
An increasing number of people are testing their personal loan eligibility online before applying for travel loans. Since personal loans are unsecured, there is a high risk of default on loan payments, thereby, requiring financial institutions setting up certain eligibility criteria before approving to the loan applications. The eligibility criteria are simple with both salaried and self-employed customers required to submit documents showing proof of their identity and residence. Proofs of identity include PAN Card while residential identity can be proved by submitting documents including Aadhaar Card, Voter ID Card, Driving License, etc. Besides, salaried borrowers must submit salary slips received over the past three months or bank statements showing details of their income and expenses over the past five months. The self-employed ones must show copies of their ITRs filed over the past two years along with the P&L accounts and balance sheets of their businesses. Quick approval and seamless disbursal reduce the travel burden considerably as intended borrowers get to enjoy the trips without having to break into their savings.
One can apply for personal loan for travel the loan either online or offline, depending on your preference to make the loan application. Made available by almost every financial institution, these loans can be taken at myriad interest rates depending on the lender. Moreover, inclined customers with a high CIBIL score can negotiate with the lending institutions for lower interest rates. This considerably brings down the equated monthly installments (EMIs) that borrowers must pay over their choice of the loan tenure.
A loan for travel
Millennials do not shy from taking personal loans for travel considering the affordability of the loans sought. The interest rates on such loans vary between 10.55 and 14 percent. It is not difficult to get a personal loan at low-interest charges. This you can do by improving your credit score by clearing your debts within the loan tenure. Also, prepaying your loans help augment your credit score, thus, prompting lending institutions to lower their rates. Also, you must ensure that you borrow an amount that you need. A higher loan amount increases the risk of default, thus, forcing you to pay penalties on non-repayment of the loan.
Choosing a loan tenure between a year and 60 months means that you have enough time to repay your loan. However, a small loan repayment period is always preferable as it involves quick repayment and relief from the burden of paying extra interest.
Prefer lenders that allow you to prepay your loan in the event of a sudden windfall as bonuses, appraisals or business profits. Many lending institutions allow scope for prepayment at zero or nominal foreclosure charges. However, check that the prepayment penalty must not be higher than your savings on loan prepayment.
Better travel experience
Not having enough savings must not be a reason to postpone a trip or vacation to your favorite place. Loans suffice in case of inadequate savings. A trip marred by fear of dwindling finances or falling short of necessary funds can be taken care of with adequate financial planning. Applying for a personal loan means taking a debt that you need to get rid of eventually with your income. Before taking any such loan, plan in a way that the EMIs do not exceed 50-60 percent of the net income. Also, the interest on the loan must not interfere with the other loans that you may have taken or your credit card payments.