Travel Now Pay Later: Could Your Dream Holiday Become A Debt Trap?

Go for a travel now pay later loan option if you have considered all the pros and cons as it can turn into a debt trap after the interest-free phase and jeopardise your monthly cash flow

- Aaron Varghese Charly

Summers are here and those who haven't already planned a trip to to the hills may be rushing to do so now. Last-minute travel plans often entail last-minute scurrying around for travel mates or funds. This is especially true for those who may be just starting out in their careers and students looking for a break after their exams, as they may not have adequate savings or a travel kitty in place. Also, booking hotels and travel may be dearer at the last hour.

Vishnu Kalarikkal from Kerala's Malappuram, who works as a senior operations associate at a social media platform, didn't plan ahead in 2021 when he took a trip to Manali with his batchmates from college. Due to their last-minute planning, their travel and hotel expenses were significantly higher than the usual rates. While Vishnu had adequate money to fund his trip, not everyone may have that flexibility.

So, what do you do for funding such last-minute trips? Lenders and travel companies understand this need and many of them are now offering travel now pay later (TNPL) schemes. These are essentially a form of loan or credit that you can take to book a trip and then pay later in instalments within a specified period. These digital credit options are offered by partner banks or non-banking financial companies (NBFCs) of travel aggregators.

But are they the right choice? The answer to that would depend on factors such as the cost and convenience, and how you balance them.

Rising Popularity

TNPL schemes are now gaining popularity. They were launched on the back of the success of buy now pay later (BNPL) schemes in the retail space in the last couple of years.

Several travel aggregators like MakeMyTrip, Expedia, SanKash, along with a host of travel agencies now offer such solutions.