People indulge in traveling for various reasons. For some, it is a getaway from the regular routine on the weekends; while for others it is a way to understand different cultures; further, many people travel to different places to fulfill their hobby of photography or to explore different cuisines and more. All said and done, one needs to have that extra money to plan an exquisite trip to a foreign land.
Many travel enthusiasts set aside enough funds each month for their travel plans. It probably is the best financial advice to plan ahead for your expenses. However, a large number of people fail to be financially meticulous and seek additional funding for the same. Herein, it is recommended to not use your Credit Card to fund the travel expenses as it could initiate a financial mess.
You can instead apply for an unsecured Personal Loan for traveling. A Personal Loan is an all-purpose loan and can be used to meet any kind of immediate financial need such as a wedding, travel, medical expenses, or more. Personal Loans can be utilized for just about anything since the end user is not restricted by the lender. Besides, it is an unsecured loan and no security is required to be eligible for the loan. The processing of the loan is also faster and the documentation process is also simpler as compared to other forms of loans, making it an ideal emergency loan option. You can opt for flexible easy installments as per your repayment capacity.
Though availing Personal Loan for travel is one of the relevant credit options, it is better to evaluate your decision before applying for the loan. You should explore all possibilities of funding the travel. If required one can budget the travel expense by choosing a destination which will suit one’s budget and try to fund for it with the savings. The purpose of planning a travel is to get away from the daily monotonous routine and come back rejuvenated. So, one should think before burdening himself/herself with a out-of-the-pocket loan amount. A travel plan meant for rejuvenation should not end up becoming a reason for financial stress in future. However, if you have evaluated your decision and compulsorily need to avail a loan to fund the trip then Personal Loan for Travel is the best option.
There are a few pre-requisites to qualify for a Personal Loan. The common parameters to qualify for the Personal Loan for Travel are given below:
- Eligibility: Salaried individuals who are permanent employees of Government/ Semi Government Departments, Autonomous bodies, MNCs, Corporates and reputed Companies and Defence Personnel are preferred by all banks and financial institutions.
A salaried individual should have at-least 3 years of work experience in the present job to apply for a loan, however. Likewise, Self-employed professionals and business owners should be in the present business for at-least last 3 years.
For targeting a higher loan amount, you must apply to your Salary bank account bank. Most banks cap the minimum salary eligibility criteria, for example, at Punjab National Bank your minimum salary must be between Rs. 10000/- to Rs. 50000/-, subject to the city of work and for ICICI Bank Personal Loan the cap is set at Rs. 17500/- to 25000/-.
- Quantum: The quantum of the loan depends on the income of the applicant. In PNB the loan quantum is higher if the applicant has completed 3 years of service in the present job and the salary is credited to the account maintained with them. The maximum loan quantum at PNB is Rs. 10.00 lakhs and in ICICI bank it is Rs. 20.00 lakhs.
- Interest: Interest is applied on reducing balance of the loan amount. Interest rate at ICICI Bank varies from 11.25% p.a. to 22.00 % p.a., while for PNB it starts from 10.75% p.a.
- Repayment: The entire loan should be repaid within 60 months or the remaining service of salaried individuals whichever is earlier. The loan to net income quotient fixed by banks range from 40% to 50%. It is recommended to choose the loan amount and repayment tenure accordingly. If the income of the applicant is not very high then choosing a longer tenure to reduce the EMI burden is advisable.
- Security: No security is required to pledge for a Personal Loan, but eligibility criteria may vary greatly for each lender. For example: For PNB Personal Loan for Travel, guarantee of third party is insisted.
- Processing charges: You also require to pay processing charges ranging from 1% to 3% of the loan amount. PNB charges processing charges up to 1.8% while ICICI Bank charges processing charges of 1.25% of the Personal Loan amount.
- Pre–payment charges: PNB does not charge any pre-payment charges. If one has availed Punjab National Bank Travel Loan then it is recommended to credit any surplus funds available to the loan account. This will reduce the loan tenure and interest burden. However, ICICI bank levies pre-payment charges of 5% in certain cases. If more than 12 EMIs have been paid and if the loan is pre-paid out of customer’s own fund and not by balance transfer, pre-payment charges are not levied.
- Credit Score: Credit Score marks the credibility of the applicant. If you have been refular in your loan EMI and credit card repayments, your credit score is bound to be good, making you eligible for low rate of interest. To avail an affordable Personal Loan, you require credit score above 700.
- Documents required: Address proof, Photo ID proof, 6 months salary slips and salary certificate, Form 16, 2 years’ IT returns, 6 months Salary Account statement, and 2 passport size photographs are required from salaried individuals. For self-employed professionals, Address proof, photo id proof, along with 2 years’ IT returns with Balance sheet and P&L Account Statement are required.
Assessing all these factors carefully, you must apply for a Travel Loan.