Should You Opt For A Personal Loan For Vacation?

Are you feeling restless confined to your cubicle at work? Is it that time of the year when you are ready to take a long leave for fun and relaxation. One of the most popular ways of unwinding is traveling, either going to a beach for the summer or trekking on a hill for the breathtaking view.

Have you put aside sufficient money in your vacation fund? If it is an international trip, you will undoubtedly require large funds to pay for the vacation. Instead of maxing out your credit card, you can take a lower interest rate personal loan to pay for your holiday expense. In the case of a domestic road trip, ensure you purchase a suitable car or two-wheeler insurance policy with a sufficient third-party liability cover.

Banks in India offer personal loans at attractive interest rates. These are unsecured loans offered to individuals with a good credit score and a steady income. Unlike a car loan, a personal loan can be used for any purpose. The end use of a personal loan doesn't matter to the lender. The most common uses of a personal loan are paying for vacation, home renovation, wedding, etc. Find a good list of personal loan here.

Why is personal loan a better source of funding for your vacation?

As previously mentioned, personal loans are unsecured loans. Therefore, you don’t have to put up your property as collateral or security in order to borrow funds from the bank. Nowadays, banks approve personal loans instantly and disburse the loan amount in a short period of time, within 24 hours. To get faster loan approval, you need to check your personal loan eligibility before applying.

With the online personal loan EMI calculator, it is easy to calculate how much you will be spending each month in loan repayment during the loan tenure. The personal loan EMI calculator is easy to use. All you have to do is enter your chosen loan amount, loan tenure, interest rate, and processing fee into the tool. You will get instant results in the form of an amortisation table wherein your Equated Monthly Instalments (EMI), interest payment, outstanding balance after each EMI payment, and the principal repayment cost of your loan will be displayed.

Another advantage of taking a loan for your vacation is because you don’t have to break your long-term Fixed Deposit to pay for your holiday expense. Also, personal loans are offered at a lower interest rate than credit cards.

Pay for your holiday expense with a personal loan

Now that you have chosen your vacation spot, picked an airline offering flight tickets at a reasonable cost, and looked into accommodation as well, it is time to focus on how to effectively use your personal loan. Here are some tips to help plan your holiday expense using a personal loan:

-Holiday expense budget: From tickets and accommodation to transportation and food costs, you are bound to spend a lot on an international trip. That is why, it is important to create a holiday expense budget. Sticking to a budget will help control your spending limit.

-Insurance coverage: Get a suitable travel insurance policy for any contingency like accident, hospitalisation, and theft or loss of luggage and travel documents. Your travel insurance will act as a supplementary health insurance policy. Having a valid health cover can ensure you get adequate and timely healthcare treatments and services while you are on a vacation at your dream destination.

-Borrow only how much you require: When choosing the loan amount, asses your financial needs, and borrow as per your repayment capability. Your loan EMI shouldn’t exceed 50% of your salary. It is important to maintain a low debt-to-income ratio.

-Choose the loan tenure carefully: The personal loan interest rate will be higher when you opt for a shorter loan tenure. With a longer loan tenure, you will end up paying more in overall interest payment. Therefore, it is advisable to use the personal loan EMI calculator to determine whether a shorter or longer loan tenure results in a lower interest payment.

-Loan repayment: Choose a bank that offers flexible loan repayment options. Banks charge prepayment and foreclosure fees on the outstanding amount. Go through the repayment clause carefully before you apply for personal loan online.

Some people travel to make new memories while others do it to satisfy their adventurous spirit. No matter what your purpose for traveling, in addition to planning your trip in advance, it is also important to know how to manage your funds efficiently. If you opt for a personal loan for vacation, keep the above mentioned tips in mind in order to efficiently manage your holiday expense.