Rina is part excited, part anxious. Her long-awaited summer holidays are finally here. As a schoolteacher, she plans for them months in advance. But this time, something is different. Her colleagues have raised the bar—most are heading to international destinations with their families. One is off to Singapore, another to Vietnam and Cambodia.
The teachers’ common room now buzzes with travel talk and Instagram reels. Everyone seems to be following a dreamy itinerary, made easy by a nearby bank offering “travel loans.” A friendly bank executive drops by the staff room with brochures in hand, accompanied by a slick-talking tour operator. Everything appears simple, tempting, and within reach—on EMI.
Caught in this sudden shift in mood and aspiration, Rina feels left out. Her husband is equally unsure. Should they take the plunge and finance a foreign trip? Or dip into their fixed deposits and mutual funds? It’s a classic catch-22.
A day before, her husband called me for advice.
Let’s break this down.
What’s being sold as a “travel loan” is essentially a personal loan repackaged. Personal loans are unsecured, meaning you don’t have to offer any collateral like a car or property. Because the bank takes on more risk, the interest rates are significantly higher compared to home, auto, or even consumer durable loans.
Worse, personal loans are disbursed directly to your account with no strings attached. The borrower is free to spend it however they want. This freedom, while convenient, often leads to impulsive spending, especially for things like holidays, weddings, or gadgets. Unlike planned expenses, impulsive borrowing increases the chance of default.
This doesn’t mean personal loans are inherently bad. They can be lifesavers in emergencies—unexpected hospital bills, urgent repairs, or bridging gaps in cash flow. But using one for a pleasure trip? Risky.
Why?
Because every loan you take chips away at your credit eligibility. Banks have a cap on how much you can borrow, and using it up for a holiday means you might fall short when you really need credit later—for a child’s education, medical emergency, or house renovation. And let’s not forget: missing even a single EMI can dent your credit score. Once that drops, your access to affordable credit gets harder.
So, does that mean you should never take a loan for travel? Not necessarily. Here’s when it might make sense:
- You’re only 10-20% short of your travel budget, and repayment won’t be a stretch.
- You’re traveling for a once-in-a-lifetime occasion—a milestone anniversary, a family wedding—moments you’ll never get back.
- You have a fixed deposit or investment maturing soon, and you’re confident you can repay the loan within weeks.
As we mature in our travel habits, we start valuing experiences over extravagance. Seeing the world doesn’t have to mean chasing what others post on social media. It’s about being changed by places, not just photographed in them.
I’ll leave you with a quote from one of my favourite traveler, Anthony Bourdain:
“Travel isn’t always pretty. It isn’t always comfortable. Sometimes it hurts, it even breaks your heart. But that’s okay. The journey changes you; it should change you. It leaves marks on your memory, on your consciousness, on your heart, and on your body. You take something with you. Hopefully, you leave something good behind.”
Happy planning—responsibly.
Dipankar Jakharia