Travel loans gain big traction among millennials
People used to save money for years to travel either within the country or outside for year-end holidays. Of late, people have started using credit cards, but end up paying huge interest rates.
With a steady increase in the youth population, which has a high disposable income, many want to travel quite often and travel loan has become the preferred choice than credit cards. Though it is at a nascent stage, travel loan is slowly gaining popularity among people, and banks too offer personal loans for travelling.
“Travel loans are preferred because the interest rates are less compared to that of credit cards and they are also easily and quickly accessible. Using credit cards or taking personal loans for travel help in arranging money which can be paid later in easy instalments,” says Qbera.com Founder and CEO Aditya Kumar.
Travel loans are essentially a variant of the personal loan. “Their features, interest rates, terms and conditions may be similar to a typical personal loan,” says Bankbazaar.com CEO and Co-Founder Adhil Shetty.
Bengaluru-headquartered FinTech startup Qbera has built a travel loan PL product with ticket sizes from Rs 50,000, which could help one travel to a nearby location within India, to Rs 7.5 lakh, for a family travelling to any exotic destination.
Travel loans are available at rates starting 14%, which is cheaper compared to spending on a credit card, where the annual interest rate comes to around 40%. “Also, not all credit cards are accepted in some countries. To avail the loan, the customer has to provide basic ID/Residence Proof documents for KYC along with their bank account statement,” he says.
Typical travel loans range between Rs 50,000 and Rs 3 lakh, depending on the type of travel, domestic or international, with the average ticket being Rs 1 lakh.
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