As travel demand hits record highs in 2024, travel loans have become a key financial tool for Indians seeking to explore new destinations. Fuelled by post-pandemic revenge travel, the rise of ‘bleisure’ tourism, and a rapidly growing middle class, more consumers are turning to travel loans to fund their trips.

“Travel loans are definitely becoming more popular, especially with the rise in international travel,” said Yashoraj Tyagi, CEO of CASHe, during a recent interview with CNBC TV18.

In the first quarter of 2024 alone, 97 million passengers travelled through Indian airports, indicating a surge in travel.

“Digital lending platforms have made it easier for people to access travel loans with minimal paperwork, allowing them to travel without financial stress,” he said.

Why now?

The shift in work culture, with many companies embracing hybrid work models, has given rise to bleisure travel — a trend where professionals combine business trips with leisure.

“Young professionals, in particular, are leading this change,” added Tyagi. “They’re looking for ways to balance work and vacation, which has contributed to an increased demand for travel loans.”

As international travel becomes more accessible, rising travel costs have led many to seek loans that offer manageable repayment terms.

With flexible loan options, travellers can spread costs over time while enjoying their trips, rather than putting them off due to budget constraints.

Eligibility and application process

Travel loans are available to anyone with a regular income, whether salaried or self-employed, provided they meet the minimum eligibility criteria.

“Typically, you must be between 21 and 58 years old, have a steady income, and a good credit score, typically above 650,” explained Tyagi.

The application process is straightforward, with minimal documentation required, such as proof of identity, address, income, and sometimes a travel itinerary or cost estimate.

Impact on credit score

While travel loans offer a convenient financing solution, they come with the responsibility of maintaining a good credit score. “Timely repayments will boost your credit score over time,” said Tyagi. “However, missing payments or taking out too many loans in a short span can hurt your credit score.”

Borrowers are advised to ensure they can comfortably manage repayments before taking out a loan.

Alternatives to travel loans

For those looking for alternatives to traditional loans, several options are available. One popular choice is credit card EMIs, which allow travellers to convert large travel expenses into manageable monthly payments.

“While this option is convenient, it can be more expensive than a personal loan due to higher interest rates,” said Tyagi.

Another option is a travel-specific savings plan offered by banks or financial institutions.

“These plans encourage regular savings while offering perks like discounted bookings or travel insurance,” he noted.

Additionally, co-branded credit cards that offer rewards like mileage points, discounts on airfares, or lounge access can help offset travel costs.

For those who prefer to avoid debt altogether, Tyagi suggested saving in high-interest accounts or fixed deposits. “These can help fund future travel plans and offer financial peace of mind.”