A personal loan for travel offers a convenient and affordable way to finance your holiday. You now have the option of financing your holiday with a personal loan. If you’re wondering which of these works for you, here are some pointers to help you with the decision.
Travelling with a term loan
- A standard personal loan provides you with a fixed loan amount in a lump sum
- It can be availed at a fixed or a variable interest rate and needs to be repaid within a specific tenor
- If you have carried out a detailed analysis of every expense that may be incurred during your trip, a personal loan is a very good option
- Since your loan amount and tenor is fixed, you can quickly determine your EMI and plan your finances with ease
- Making repayment is easy when it comes to a term loan as your EMI is fixed and includes both the interest and principal components of your loan
Travelling with a Flexi personal loan
- A Flexi personal loan functions more along the lines of a credit card. It offers access to a ‘credit facility ’ – a maximum loan amount that you can use over a defined period
- You can withdraw up to this limit as and when you need money
- Like repaying debt on a credit card, a Flexi personal loan involves making payments based only on the amount that you borrow against the overall credit limit
- If you are unsure about your travelling expenses, a Flexi personal loan is the best funding option
- For example, let us assume that the average daily cost for travelling in Australia is around $189. This means that you will require approximately Rs. 3.5 lakh per person for a one-month trip to Australia. However, this is an estimated figure that will vary according to your needs
- Therefore, instead of taking a term loan for exactly Rs. 3.5 lakh and then having to make adjustments, it is a better idea to opt for a credit facility
- This way, you can opt for a higher credit limit and utilise funds without any worry
- Moreover, you only have to pay interest on the funds used, offering you greater flexibility and the freedom to borrow what you need rather than a larger amount with a bigger EMI
- You may pay up to 45% lower EMI when you opt for this option since your EMI comprises only your interest, and your interest is applied only to the amount used
- Additionally, you will also have the benefit of paying the principal amount of the loan at the very end of your tenor, which provides for better control over finances
Your final decision will depend on how much planning you’re going to do before applying for a funding option. If you are aware of the actual expenses during your trip, opt for a term loan. Conversely, if you would like to leave a little room for unexpected costs and withdraw as you go, you can pick a Flexi personal loan. Whatever your choice, make sure your loan provider offers advantages like instant approvals and quick disbursals. A good example is a personal loan for travel by Bajaj Finserv, which offers the fastest disbursal time compared to other NBFCs in India.
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