Travel Now, Pay Later in India: A Smart Way to Finance Your Trip

After two years of isolation and numerous trip cancellations, you might be wanting to de-stress by taking a short vacation. In fact, it’s not just you who is itching to travel again! The travel industry across India is quickly catching up to pre-pandemic levels of activity. Whether an adventurous trip to Ladakh or a sun bath on Goa’s beaches, the visitor traffic is high everywhere.

As a result of the growing demand, many financial institutions have introduced a travel now, pay later option to make travel and leisure activities more accessible. So, if you are planning your next trip, you should learn everything about this product and how it can help your travels become more memorable.

What is Travel Now Pay Later finance?

Travel now, pay later is a kind of buy now, pay later (BNPL) financing scheme that allows you to pay for your travel-related reservations without having to incur anything out-of-pocket. If paid within the specified time frame, most loans have a no cost EMI option. However, if you miss a payment, the lender will charge you an interest on the principal amount.

How does Travel Now Pay Later financing work?

The travel now, pay later is available from a variety of financial institutions. In this type of financing scheme, the disbursements are broken down into small amounts and divided into a series of payments. You must make the first payment when you check out of the hotel.

Financial institutions that provide this loan have tied-up with various hotels, airlines, restaurant chains, and a few more travel facilitators. The collaboration enables these partners to offer the BNPL service on their websites.

Let's understand the specifics of this scheme with the help of an example.

Assume you want to book your trip through a travel agency named XYZ Tours Ltd. The company has partnered with a few financial institutions to offer travel now, pay later. When you choose this option, you will be required to pay the availed funds over a set period at a fixed annual percentage rate (APR), which includes an interest component and various charges. Once your booking is complete, you can set off on your trip without paying anything to XYZ Tours Ltd. The payment cycle starts only after you have completed the trip.

Who Should Consider the Travel Now Pay Later Option?

The Travel now pay later financing option is best suitable for:

Emergency Travellers: When you have to travel for an emergency (these can be for medical reasons or family emergencies).

Budget-Conscious People: If you don't want to deplete your savings, and you want to spread out travel costs over time.

People with Good Credit Profiles: If you have a good credit score, you can get a loan at favourable rates.

People who Travel for Work: If you frequently are required to travel for work, you can manage your travel expenses and pay instalments.

Also Read : Should You Take Out a Personal Loan to Fund Your Honeymoon?

Is a Personal Loan for Travel a Good Idea?

The answer will ultimately depend on your individual situation and finances. However, the following tips may help you decide whether to take up a Personal Loan for travel to travel now and pay later in instalments.

When should you opt for Travel Now, Pay Later?

1. Zero Percent APR Loan
   Applying for this loan is ideal if you qualify for a zero percent APR offer. The lender or your travel partner will provide you with such an offer if you have a strong credit profile. For example, if you are regular on your credit card payments and have never skipped any previous loan EMIs, you may easily qualify for such a lucrative offer.
2. Emergency Situations
   There may be times when you need to travel immediately. Some of these situations include a relative's funeral, a medical emergency, and so on. Assume you have been diagnosed with a disease that necessitates treatment in another country. Would you prefer depleting your emergency funds for paying for your flight bookings and lodging or would you prefer paying it for your treatment? Using a travel now, pay later scheme would be the better option in this case.
3. You have backup funds
   No financial product is free. You must pay some amount, either in the form of interest or transaction fees, to obtain the benefits. The same is true for pay now, travel later financing. If you have backup funds, then you can easily pay off the loan on time without incurring any penalty or interest.

Alternatives to Travel Now, Pay Later

There are numerous financing options available to assist you in planning your vacation. The two most common ones are listed below. 

1. Personal Loans:
   Personal loans are the best alternative to travel now, pay later financing. When you apply for this loan, the lender digs into various things. They look at your credit score, business finances, employer credibility, monthly income, and other factors to determine your repayment capacity. If everything is found to be satisfactory, you could receive up to Rs 5 lakh loan easily without any collateral.
2. Credit Card
   When it comes to travelling, credit cards are one of the most used loan products. When you apply for this loan, the lender does not charge you any interest rate right away and gives you a deadline by which you can repay the loan without paying any additional amount. 

Important Factors to Consider Before You Choose Travel Now Pay Later

Here are some things you need to keep in mind:

• Interest rates & fees: Check loan interest rates and other fees like prepayment and cheque bounce charges.
• Late Payment penalties: Not making your monthly instalment or late payments can lead to additional charges and decrease your credit score.
• Loan Tenure: You need to choose a repayment term you can manage comfortably.
• Hidden fees: Apart from the processing fee, check hidden fees before you apply.
• Eligibility: Check if you meet all of the eligibility, including credit score and minimum income to avoid rejection of application or delay.

Conclusion

Travel now, pay later options have made travel and leisure activities more accessible for people on a limited budget. However, it is important that you do not overindulge in luxury on trips financed through this option. In addition, you must carefully read and understand the terms and conditions for these loans and enquire about any hidden charges. Also assess your current finances because any delay in EMI payment can result in a higher interest and negatively affect your credit score.

Frequently Asked Questions 

What credit score do I need for Travel Now Pay Later?

Most of the lenders require a credit score of 750 or more. A good score improves your chances of loan approval at an attractive rate.

Can I use Travel Now Pay Later for international travel?

Yes, you can use a Personal Loan for travelling to international destinations and repay in monthly instalments. It can help you pay for international flights, hotels, and other travel-related expenses.

Is Travel Now Pay Later interest-free?

No, every loan comeswith interest charges. You can secure best rates based on your eligibility, including your credit score.

What happens if I miss an EMI payment?

Missing EMI payments can lead to add on interest, late fee charges and drop in credit score. 

How is Travel Now Pay Later different from a personal loan?

Travel now, pay later is a form or Personal Loan taken especially for travel purposes. At Hero FinCorp, you can get a Personal Loan for travel of up to Rs 5 Lakh and repay in tenures of 12 to 36 months.