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Is Buy Now Pay Later Loan a Smart Way to Finance Travel?

August 09, 2023 • 1245 views

Travelling is a wonderful way to explore the world and create unforgettable memories. However, financing your travel expenses can sometimes be a challenge, especially when you're short of funds. This is where the Buy Now Pay Later Loan (BNPL loans) option comes into play. 

In this article, we will delve into the concept of travel now, pay later (TNPL) financing. Explore its workings, benefits, and reasons why it can be a smart way to finance your travel adventures.

What is a Travel Now Pay Later Loan?

Travel Now Pay Later loan refers to a payment option that allows you to book and enjoy your travel experiences immediately while deferring the payment for a later date. It enables you to split the cost of your travel expenses into manageable instalments, making it more affordable and convenient for you.

How Does Travel Now Pay Later Financing Work?

You can select the travel now pay later financing option during the travel booking process. Once approved, you can proceed with your travel plans, and the total cost will be divided into equal instalments. You will then be required to make the payments over a specified period, usually with no or low-interest charges.

To sponsor these deals, the lenders often tie up with various hotels, airlines, and restaurant chains. These collaborations improve loan accessibility as you can discover the offers while booking flight and accommodation services. To further understand the process, check out the example below:

Suppose you want to travel to Vietnam with a tour planning company named ABC Tours Ltd. Now, this company maintains business tie-ups with various lenders who provide TNPL schemes. When you opt for a pay-later scheme, a contract needs to be signed. According to its terms, you must repay the borrowed sum at a fixed annual percentage rate (APR). However, while the booking gets processed you can set off on your travel without paying anything. The repayment period starts after you have returned from the trip.

Also Read: Can You Get a Personal Loan for Travelling Abroad?

How TNPL is Impacting Travel Budget Decisions?

Earlier, you had to plan a trip based on your disposable income. Thus, the budget was fixed, which meant you had to miss out on several travel aspirations and experiences. But now, with TNPL, deciding your travel budget has become a lot more flexible.

Irrespective of your financial background, you can choose to travel to any destination of your choice thanks to TNPL. Thanks to its flexible repayment period, TNPL is gradually becoming the go-to travel finance option for most Indian citizens.

What You Should Be Careful of While Availing of TNPL?

Although the eligibility criteria for a buy now pay later loan plan are minimal, you should consider other related factors before opting for one.

Usually, most lenders allow a shorter repayment period and levy much higher penalties in case of a default. Not only do you need to furnish the additional interest but also missed repayments negatively impact your creditworthiness.

Therefore, it will be ideal if you can manage a reasonable tenure for repaying a no-cost travel loan. Additionally, before entering into a loan agreement, make sure to confirm whether there are any hidden terms and how much the penalties can sum up in case of instalment delays.

What is the CIBIL Score That You Need to Have for TNPL Loans?

For a pay-later loan, the lenders do not fix any stringent eligibility criteria. As a result, you have to go through very little paperwork. However, if you have a good CIBIL score of 650 and above, you can experience quicker approvals and faster disbursals.

Typical Loan Size and Repayment Time for a TNPL Loan

Some financial institutions sanction a Buy Now Pay Later loan to travellers of up to Rs. 30 Lakh. However, the interest rate, tenure, and principal loan amount can vary among lenders. To make it easier for you, NBFCs like Poonawalla Fincorp provide a free online EMI calculator that you can use to determine your loan EMIs as well as the repayment schedule.

Benefits of Travel Now Pay Later Financing

Pay Later travel financing offers numerous advantages for individuals seeking to finance their travel expenses. The following are the key benefits:

  • Immediate Access to Travel

One of the primary benefits of travel now, pay later financing is the ability to embark on your trip immediately. It allows you to book your travel arrangements promptly and visit your desired destination without delay.

  • Budget-Friendly Approach

Pay later travel financing allows you to divide the total cost of your travel into smaller, more manageable monthly instalments. This helps you incorporate your travel expenses into your regular budget without straining your finances.

  • Flexible Repayment Options

Pay Later loan offers flexibility in terms of repayment options. You typically have the freedom to choose a repayment tenure that aligns with your financial situation and preferences. Depending on the provider, you may also have the option to adjust the instalment amount or extend the repayment period if necessary.

  • No or Low-Interest Charges

Many pay-later travel financing options come with little to no interest charges during a promotional period. This can significantly reduce the overall cost of borrowing, making it a cost-effective solution for financing your travel expenses.

  • Simplified Application Process

Applying for BNPL loans for travel is often a straightforward and hassle-free process. Most lenders allow you to apply online, saving you time and effort.

  • Enhances Credit Opportunities

Successfully repaying your BNPL loans for travel can have a positive impact on your credit history. Timely payments and responsible borrowing behaviour improve your credit score, making it easier to access credit in the future.

  • Financial Flexibility

Pay later loans for travel provide the financial flexibility to manage unexpected expenses during your trip. Instead of depleting your savings, you can use them as a backup or for other important purposes. This ensures that you have a safety net and peace of mind while travelling.

  • Reward Opportunities

Some pay-later financing options offer rewards or loyalty programs that allow you to earn points or cashback on your travel expenses. These rewards can be utilised for future travel or other financial benefits.

Also Read: Reasons to Choose Personal Loan for Your Next Vacation

To Conclude

Travel now, pay later financing offers a convenient and accessible way to finance your travel adventures without depleting your savings or resorting to high-interest credit cards. By opting for this smart financing option, you can embark on your dream vacation while managing your finances responsibly.

If you're considering financing your travel plans, explore the Travel Loan services offered by Poonawalla Fincorp. Their customized loans and competitive interest rates can help you turn your travel dreams into reality while ensuring a smooth and affordable borrowing experience.

Frequently Asked Questions

  • Why do people use buy now pay later loans?

People use Buy Now Pay Later (BNPL) loan options for various reasons. It provides immediate access to desired products or services without requiring full payment upfront. It can help manage cash flow by spreading out payments over time. Additionally, it offers flexibility and convenience for budgeting and making purchases when funds might be temporarily limited.

  • Is it smart to opt for a buy now pay later loan?

Whether it is smart to buy now pay later loan depends on individual financial circumstances and responsible usage. It can be a useful tool when used wisely, allowing individuals to make necessary purchases while effectively managing their finances. However, it's important to consider interest rates, fees, and the ability to make timely payments to avoid accumulating unnecessary debt.

  • Is it safe to apply for a TNPL option?

The safety of using a specific "Pay later" service depends on the provider and their security measures. It's advisable to use reputable and trusted platforms that prioritise user data protection, secure transactions, and strong customer support. Reading reviews, understanding the terms and conditions, and practising safe online habits are important when using any financial service or application.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

We are a team of expert writers and editors passionate about providing our readers with authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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