Last week, one of our tech guys shared a story about how his cousin took a travel loan of Rs. 3 lakh at 12% interest to fund a leisure trip to Europe with his wife. That’s what gave me the itch to write today’s topic. Unlike a home or car loan, this debt didn’t create any asset. Worse? Apart from repaying the principal, he’s now burdened with interest. As per ‘How India Travels Using Holiday Loans (Vol 2.0 July 2025)’ by Paisabazaar, around 27% of Indians indulge in travel loans. When I mentioned this to my uncle, he couldn’t comprehend that there was a thing called ‘travel loan’.
What exactly is a travel loan? Most apps/banks market it as a quick, easy way to fund vacations. But dig deeper and you’ll find it’s just a repackaged personal loan. Banks classify loans into two types:
- With collateral (like a house or car, lower interest)
- Without collateral (like personal loans, higher interest)
Travel loans fall in the second category. With no asset backing them, banks charge steep interest rates. From our Moneybar seminars and workshops in Nagaland (and beyond), and from data on our platform, we’ve seen how travel is increasingly seen as a need instead of a want. And this travel loan’/holiday loan phenomenon is riding on that sentiment
Should you take one?
The answer for all loans without collateral is a clear NO. Here are 5 smarter ways to fund your travel:
Save first, travel later.
Staggered bookings:flights one month, hotels the 2nd month, etc., so it doesn’t pinch at once.
Ask your family for help:in most homes, parents seldom deny money. Consider it a loan and repay slowly.
Try a staycation or short trip within budget.
Use credit card reward points to fund your trip, but only if you can plan astutely. Not ideal for beginners.
Yes, wanderlust is real. But so are better money choices. At Moneybar, we’re a community that talks about these choices openly. A members-only webinar on financial wellbeing is around the corner, watch our socials for details. Make sure you’ve downloaded the app, signed up, and requested to join!
Let’s wander without debts.
Paweii Kayina
Founder & CEO, Moneybar