Using Personal Loan to Finance your Travel
Exploring new places, meeting people, learning some new traditions and customs, and savouring different cuisines are some of the reasons that make traveling super exciting. There are many people who travel for adventure while some travel for escaping the regular hustle & bustle of life. Everyday routine work gets boring for everybody and therefore, we all need a break in life. Hands down, there is no better escape than an amazing vacation.
However, traveling is not about adventures and fun always. Sometimes, it could be about attending social or family functions that you cannot avoid, while at sometimes it could be related to healthcare issues of someone in your family or of your own. Such situations cannot be avoided and you will have to travel anyhow.
But no matter what the reason is behind your trip, money is something indispensable. What will happen if you do not enough money to fund your trip? Such a situation might have just two outcomes- you may either end up canceling your trip or you’ll have to arrange for the money. One of the best ways for funding your travel is by using a personal loan in UAE.
You can easily get a travel loan for taking your dream vacation or for funding an urgent and important trip, whether it is foreign or domestic. Such loans are simply personal loans and therefore are unsecured and can be lent without any collateral or guarantee. However, based on the policies of the bank, some lenders might ask for a guarantor with a huge loan amount.
Things to Consider about Personal Loan for Traveling
A personal loan in UAE is an unsecured loan that comes with a multipurpose nature, which means it can be used for any purpose including funding for vacation and travel. You can use this loan for all the aspects of your trip like accommodation, flight tickets, purchases, and more.
The processing of such a loan is quick and easy. All you need is to meet the eligibility requirements and have the suitable documents.
The one thing that can make you have second thoughts is the rate of interest. These loans have a high rate of interest as they are unsecured. However, travel personal loan is still more economical as opposed to credit cards, the transactions on which may charge an even higher rate of interest.
Some of the lenders have also come up with a specific kind of personal loan for the traveling purpose, known as travel loans. Usually, personal loans are unsecured loans while travel loans can be both unsecured as well as secured in nature. The unsecured side of this loan makes it simple for the borrowers to get it when they do not have a guarantor.
On the other hand, the secured side of the loan makes it affordable and more economical for the borrowers because the rate of interest goes down with security.
Another advantage of a personal loan in UAE is that it can be obtained online also; hence there is no need to visit the lender frequently. You can apply for the loan using your phones or laptops from wherever you are. The entire process is totally online including the documentation part. This procedure is very quick and you can also get instant approval from the bank if you meet all lenders’ requirements.
When should you go for a Personal Loan for the Purpose of Traveling
Although the rate of interest on the personal loan is high, it’s recommended that you apply for a personal loan for the purpose of traveling whenever you are short of money for financing the trip. This is a good option because using your equity shares and emergency savings for funding your travel is not a wise thing to do.
The tenure of such a loan is short and therefore, it can be paid off in a short time period. Another benefit of the loan is that you can also do the partial payment of your loan or even foreclose it when you have adequate money with you.
Easy Options for Repayment with Flexible Tenures
When it comes to repayment of the loan, there is a flexible tenure available to the borrowers of the loan. The EMIs can also be calculated according to the policies of the lender, the amount of loan, profile of the applicant, and the loan tenure. The prepayment options for the loan are also provided by some of the lenders. However, you have to check for this before you sign the loan agreement.
Documents and Eligibility Requirements
Both self-employed, as well as salaried individuals, can apply for this loan to fund their trip. However, the approval is totally dependent on the applicant’s eligibility. The eligibility criterion may vary from one lender to another. When you apply for the loan online, the paperwork is also very less.
The required documents include- address proof, ID proof, bank statements for at least 3 months, and passport size pictures along with signed copies. Apart from this, a few lenders may also request the details of the trip such as the flight ticket charges, accommodation cost, and more, but this may vary from one vendor to another.
When should you Avoid Personal Loans for the Purpose of Traveling
It is recommended to avoid borrowing funds from lenders or banks if in case you can fund the travel expenses yourself from your own pocket. That way, you will be able to save money that otherwise you will have to spend as an interest on your installments. You must avoid travel or personal loan in UAE if your monthly savings are not adequate for servicing your installments.
As an alternative, you can redeem your low-yield surplus investments like debt funds and fixed deposits for financing your trip as the returns are generally lower than the interest payouts.
Alternatives for Personal Loan in UAE
These can be used for financing your travel because they let you pay off the expenses after 2- to 55 days of incurring them. You also have to convert the credit card due amount to EMIs. But ensure that you compare the rate of interest with that of the personal loan. Usually, the rate of interest charged on credit card installments is higher than the rate of interest on travel or personal loan.
Taking a loan against securities, such as stocks or mutual funds, have a lower interest rate as opposed to a travel or personal loans. You can obtain this loan if you have adequate long-term investments for using as collateral to finance your trip.
The Bottom Line!
Travel finance, just as any other type of loan includes an inherent cost of interest. You can get a personal loan in UAE for trips in case the trip is unavoidable or of high priority. Rather than availing loans for financing travel, you can start planning early and form a corpus for your travel expenses. This can be done by investing in mutual funds and other such investments regularly. But if the travel is urgent and unavoidable, ensure to compare different options for a personal loan before you settle on anyone.