Factors to Consider When Applying for a Travel Loan

Apr 5, 2024
 |  1 min read

Traveling is a great way to refresh your mind by visiting new places, learning about new cultures and making lasting memories. However, paying for your trip can sometimes be a headache, especially if you're planning a big trip. In such cases, an emergency travel loan online can be a good emergency financial tool to help you pay for travel expenses.

On the other hand, before getting travel loans, you should think over different aspects to ensure you are making the right choice for your financial position.

What do you Need to Check Before Getting a Travel Loan? 

  • Budget: Decide about your travel expenses, such as accommodation, tickets, and food. Choose your loan amount a little higher than your budget so that you would have some of the unplanned expenses occur.
  • Interest Rates: Personal travel loans generally have higher interest rates than other loans. Explore the market to find the best loan rate to suit your needs.
  • EMI: Prepare EMI every month to ensure it fits your budget well. If the EMI is too high, it may not be easier for the borrower to repay the loan within the stipulated time.
  • Timeliness: Considering a shorter payment term can help you save a lot of money.
  • Credit Score: If you have discrepancies in your credit report, fix them and consider improving your score before submitting a loan application.

How do you Know if you Qualify for a Travel Loan?

It is also important to confirm you are eligible for the travel loan. However, have you got an idea if you are eligible for the travel loan?

One of the requirements of travel loans is to fulfil certain qualifications. Although these loans are mainly catered to working professionals, some loading companies could extend them to self-employed individuals with stable incomes.

Here are the standard eligibility requirements:

  • Age and Residency: You should make sure that you fulfil the lender's age criteria and live in the country where you apply.
  • Employment: Lenders could even require you to have a regular source of income or a stable job to obtain a travel loan.
  • Credit History: Your payment history and the span of your credit history will also be taken into account. A good credit history can widen your chances of getting a travel loan.
  • Income: The lenders would determine whether you have the financial capability to repay the loan by assessing your income. A higher income can increase your chances of acquiring a travel loan.
  • Credit Score: A credit history is usually a condition to receive a travel loan. Lenders rely on your credit score to measure your creditworthiness and determine the interest rate that you will be paying.
  • Debt-to-Income Ratio: Your monthly debt payments and monthly income are also something lenders will consider. A debt-to-income ratio indicates that you have money left over to pay off your debt.

How can you Apply for a Travel Loan, and What Documents are Needed?

Getting a travel loan generally involves the same processes as applying for other types of personal loans. It is a brief description of how to obtain a travel loan and the documentation required.

Research Lenders: For starters, look up lenders that offer travel loans and check their interest rates, terms and eligibility.

Eligibility Criteria: Determine what the borrower should need to qualify, such as income, credit score and age.

Collect Documents: Prepare the following documents required to apply for a loan:

  • Proof of identity (e.g. Aadhaar card, PAN card, passport, or driving licence);
  • Proof of residency (e.g., utility bills, rental agreements, or bank statements);
  • Proof of income (e.g. payslips, bank statements, or income tax returns).
  • A job description (e.g. a reference letter from your employer or employee).
  • Travel plan or letter of recommendation (excludable but may be required by some lenders);

Fill out the application form: Provide necessary details like your profile, income statement and loan amount.

Instructions: Complete the application form, attach the documents and submit it to the lender.

Credit Processing: This may include reviewing the information provided and also considering the suitability of the loan as well as the purpose for which you need the loan.

Loan Approval: The lender will provide a letter stating the loan amount, interest rate, repayment term, and other information.

Credit: The lender will transfer the money to your bank account. Here, you can use the money to pay for your trip.

Repayment: You have to repay the loan every month within a certain period.

How can you Plan to Pay Back your Travel Loan Without Problems? 

For your successful repayment without problem, it is advisable that you plan and make decisions concerning your finances carefully to come up with a repayment strategy. See how you can pay off your travel loan with no difficulties.

  • Budgeting: Make sure that you can repay your loan without endangering your fundamental expenses. 
  • Prioritise Loan Repayment: Try using the automatic payment system to avoid interest and late fees and make sure you never miss a deadline. 
  • Emergency Fund: Create an emergency fund to cover any unforeseen expenses and never use credit or take out additional loans to meet financial challenges.
  • Avoid Additional Debt: It is possible to help you stick to your repayment plan and, thus, protect you from further financial stress.
  • Monitor Progress: Make sure you monitor your loan repayment progress from time to time and update your budget to stay on target.

Conclusion

Travel loans are blessings in disguise as they make it easy to handle your travel costs well while not getting worried about any financial problems. mPokket is a platform that gives instant cash loans online to students and young people in India. It helps people to meet cash needs for multiple reasons such as tourism. The app provides a hassle-free option for getting cash within seconds, be it planning a trip or looking to treat themselves to some shopping. Through its quick and easy application process and rapid approval of funds, mPokket is a good way to get money for travel or to purchase goods via a loan.

Gaurav Jalan

Gaurav Jalan is the Founder and CEO of mPokket, a digital lending platform serving underserved Indian youth. He leverages technology and experience to deliver cost-effective credit to marginalized populations. In his role, he provides strategic direction and oversees execution to fulfill mPokket's mission.