The New Year 2023 is just round the corner and it is when most of us either travel or plan to travel with our family and friends. While some prefer to travel within the country, others like to go abroad and explore a different culture, lifestyle, and nature. Travelling to a foreign country requires proper planning for a visa, flight tickets, food, local transport and booking hotels, and preparation of a budget to handle travel expenses.
Travelling to a foreign country is also costly, and you must carefully arrange funds to avoid money problems while in another country. Since foreign travel is getting expensive owing to the higher cost of flights, hotels, and transport, you must plan a budget before you fly abroad.
Here are some options through which you can arrange funds when you plan an international trip.
Personal loan
A personal loan can come to your rescue if you are feeling the cash crunch for your trip. It is an unsecured loan, so you don’t need to pledge any collateral while availing the funds. If you have a good credit score and clean prepayment records, you can easily make use of a personal loan for your travel plans. However, it is advisable to borrow what is required for your travel as personal loans typically command higher interest rates ranging between 10% and 20%, and even higher. The lender may also levy a processing fee. So, assess all the associated charges before you go ahead.
Travel loan
A travel or holiday loan is a type of personal loan borrowed specifically for funding travelling activities. Since this is an unsecured loan, it comes with a short tenure. Many lenders also offer these loans as just personal loans. You can avail of travel loans for both domestic and foreign travel. The interest rates for travel loans may start from 10.50% and go up to 15% and even more depending on the lender and your profile and eligibility. These loans’ key features are affordable interest rates, quick disbursal, and a minimum documentation process.
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International credit card
Having an international credit card can be very useful when you make transactions with merchants across the globe. If you fall short of funds, these credit cards can come to your rescue and help you provide much-needed liquidity. However, it is essential to know about all the charges related to services you avail to avoid too many additional costs.
These credit cards typically charge you annual and joining fees, which may range from Rs 250 and can go up to Rs 3,500 and even more depending on the type of card you choose. Besides, you may be charged some money for cash withdrawal, currency exchange, etc., and the rate of interest can go up to 45% annualised.
Travel operators finance scheme
These days many tour operators are offering financing schemes for foreign travel. The schemes are often launched in association with NBFCs and financial institutions to provide funds for travel tickets, hotels, food, transport, etc. Depending on your requirements and income, these schemes offer funds of Rs 1 lakh to Rs 5 lakh. You can also pay the total travel cost to your tour agency in EMIs.
Also, some fintech companies offer ‘Travel Now, Pay Later’ similar to BNPL offerings. Depending on your repayment abilities, these offer Rs 1 lakh to Rs 3 lakh or more. The interest on such loans vary from lender to lender, but typically starts from 11% and go up to 20% and even more.
Adhil Shetty, CEO, BankBazaar.com, says, “If you plan to take a personal loan for travel, ensure that you have a budget and borrow only after assessing your repayment capacity. With a credit score of 750 or above, you will be better positioned to negotiate with your lender for a lower interest rate. Choose your loan tenure and amount carefully and ensure that you repay it as per the terms and conditions agreed to with the lender.”
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Whenever you are availing a loan for travel, you must pay attention to the rate of interest. Compare the interest rates, additional charges and T&Cs of different lenders before borrowing. Travel is a discretionary expense. So, only take a loan when you have sufficient income to pay back your debts without any financial stress.
Travel SMART
* Take a loan when you have sufficient income to pay back your debts without any financial stres
* Compare the interest rates, additional charges and T&Cs of different lenders before borrowing
* With a credit score of 750 or above, you will be able to negotiate with your lender for a lower rate