Stuck With High Travel Loan Payments? 6 Strategies to Reduce Your Monthly Burden

The EMI obligation and stress of a high travel loan can be better managed with some smart planning and a few different strategies. From refinancing to lender negotiation, these solutions give you a few ways to ease the worry of monthly payments without risking default. Keep reading to better understand these 6 ways to reduce your travel loan EMI burden.

6 Ways to Manage Your Travel Loan More Effectively
 

Here are 6 options you can explore to reduce your loan burden; pick the one that aligns most with your current scenario to see better results.

1. Make a Lump Sum Part-Prepayment
Consider putting any windfall amount, like tax refunds, work bonuses, or financial gifts, into the payment of your loan as part-prepayments. By paying off a portion of the principal amount directly, you reduce the total on which future interest is calculated. As a result, even a small prepayment can lead to savings over time.

For example, if you can make a ₹20,000 prepayment on a ₹3 lakh travel loan, you could save thousands in interest down the line.

However, always check your loan agreement before you make a prepayment. Some lenders impose penalties for making early repayments, while others might encourage them. It’s important to calculate whether the savings in interest are worth any fees you might incur.

2. Boost Your Cash Flow
Finding ways to boost your income is a solid strategy for managing your EMI while reducing stress. Consider taking up freelancing, consulting, or part-time work, especially in roles that align with your skills. Many online platforms offer flexible opportunities, allowing you to earn extra money through tutoring, writing, or even delivery services that you can take up in your own time.

Alongside seeking out additional income, ensure you scrutinise your current monthly expenditures and cut out any unnecessary spending. Even a few hundred rupees every other day adds up substantially, freeing up more cash for your loan payments.

Channel all this additional income and freed-up money into your loan repayments. Even an extra ₹5,000 or ₹10,000 a month can either comfortably cover your EMI or give you a chance to make significant prepayments, directly tackling the financial stress.

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3. Talk to Your Lender About Flexible Terms
Talking to your lender, especially if you anticipate your financial situation worsening, is highly recommended. Most lenders would rather negotiate the loan terms than risk a default.

When approaching your lender, be honest about your situation and have a clear repayment proposal in mind. If you’re facing challenges due to job loss or medical issues, document these circumstances. As part of your negotiations, your lender may be willing to explore an extended loan tenure, a moratorium period that pauses your EMIs, or lowered interest rates. 

4. Consider Refinancing for a Better Interest Rate
Refinancing involves replacing your current loan with a new one that has a lower interest rate. Since interest rates fluctuate due to market conditions, you might find that you’re eligible for a better deal, especially if your CIBIL score has improved.

The table below shows an example of the potential savings of refinancing a ₹5 lakh loan on a 3-year tenure; with just a 3% interest rate drop, the overall savings prove to be substantial:

Consider lenders who specialise in loan refinancing and thoroughly explore your options. Once initiated, this process doesn’t usually take long, around 7 to 10 working days, depending on your lender. Just remember to account for processing fees or other charges that might come along with refinancing.

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5. Simplify Finances with Debt Consolidation
If you have multiple loans and debts alongside your travel loan, debt consolidation could be an effective way to simplify your financial situation. Combining various debts into one loan with a lower interest rate makes it easier to manage since you have one monthly payment. You’ll have fewer due dates and interest rates to keep track of, which can bring peace of mind.

Compare the total costs of the new consolidated loan, not just the monthly payments, to make sure it's a better deal. Additionally, ensure the new loan’s interest rate is lower than your current weighted average to make the most of the consolidation. 

6. Leverage Your Investments Strategically
While this isn’t an ideal solution, liquidating some investments can help ease the burden for a while until you have a better plan in place. Check the interest rate on your loan against the returns from your investments. If your loan interest is 13% but your Fixed Deposits are earning only 6%, it might be worth cashing out some investments to reduce your debt.

Consider tax implications and ensure you’re not liquidating investments too much. This strategy is best suited for situations where high-interest debt outpaces investment returns. If you’re uncertain, consult with a financial advisor to ensure this decision brings you benefits in the present while not straying too far from your long-term goals.

Also Read: Key Things to Know Before Using a Personal Loan for Debt Consolidation

To Conclude

The joy of the trip funded by a travel loan should not be lost in the loan’s repayment. The strategies outlined above are practical moves that help reduce EMI burdens while maintaining financial stability. Even the smallest action taken today helps bring you closer to being debt-free.

If you’re keen on exploring travel loan refinancing or a Personal Loan for debt consolidation, Poonawalla Fincorp offers competitive rates and flexible terms designed for financial comfort. 

FAQs

Can refinancing damage my credit score?
Refinancing involves a hard credit enquiry, which could cause a slight reduction in your score. However, this reduction is temporary, and a consistent repayment of the new loan will improve your score over time.

How much can part-prepayments save?
On a ₹5 lakh travel loan at 12% for 5 years, prepaying a total of ₹50,000 annually could save over ₹80,000 in interest. This is what makes prepayments so effective.

What documents do lenders need for restructuring requests?
Typically, salary slips, bank statements, and a written request explaining your situation are enough for restructuring applications.

Is using investments always advisable for loan repayment?
No, breaking investments is not always an advisable solution. Consider factors like loan interest rates, investment returns, tax benefits, and your emergency fund status before deciding.

How quickly can debt consolidation reduce my monthly outflow?
Debt consolidation can reduce monthly payments immediately upon disbursement. This often happens within 7 to 10 days of application approval.