Fly now, pay later: The rise of travel loans
A recent study by IndiaLends found that 85% of individuals who applied for loans of Rs 30,000 to Rs 2.50 lakh were for travel purposes by millennials.
The study was conducted ahead of World Tourism Day on September 27 and covered both salaried and self-employed Indians across 6 major cities — Mumbai, New Delhi, Bengaluru, Hyderabad, Chennai, and Kolkata.
Out of the total loan applications received from this demographic group, also known as Generation Y, in the last one year, 19% were for travels across all the 6 metros; the maximum (20%) was received from Hyderabad, followed by Mumbai (19.7%) and Bangalore (19%).
For a new generation of young salaried and tech-savvy professionals in the country, the idea of approaching traditional banks for loans is not appealing, given the long and lengthy application process. Instead, they are turning to digital lending companies who are giving new-to-credit salaried individuals with zero credit history, including millennials, easier access to loans for travels to exotic destinations around the world.
According to IndiaLends data, borrowers usually opt for countries that offer visa on arrival, since most millennials take loans for last-minute vacations to countries such as Thailand, Dubai, Sri Lanka, Indonesia, Nepal, the Maldives, and Bhutan. Generation Y also applied for loans for luxury destinations in Europe, USA, South Africa, Australia, and New Zealand.
Within the country, Goa, Rajasthan, Kerala, and Ladakh are the most popular destinations among young Indians.
IndiaLends Founder and CEO Gaurav Chopra said, “The emergence of leisure consciousness among India’s young adults and the realisation of the importance of a balanced lifestyle has led to an increase in both domestic and international travel.”
A lot of these travel plans are the result of long weekends and last-minute holiday plans which require quick and easy access to finance. A growing number of millennials are taking personal loans to satisfy their wanderlust. In many cases, the loan is a safety cushion to enhance the holiday experience.
“There has been a shift in the younger generation in terms of financial planning. Those applying for loans are not just those who don’t have enough savings, but also those who want to enrich their travel experience or wish to visit exotic destinations. This reflects the growing popularity of digital lending in India. For new-generation customers, the ease of service is an important criteria for choosing the servicing company,” Chopra added.