Travel loans and all you need to know before taking one

HIGHLIGHTS
  • Youth prefer gaining more experience in life to improve their employment prospects.
  • Nowadays, many people use credit card facility for purposes other than an emergency.
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Instagram has created a new breed of wanderers - 'millennial travellers.' These millennials live in the future while the middle-aged folk dwell in the past. A thought has now emerged which says one should set out on a trip even suffering a financial loss.

Funding the trips

Having enough money to travel is a utopian dream. The new generation is often termed irresponsible and finds thrill in visiting faraway places where they believe bliss exists. They follow instructions from strangers on Instagram and launch trips to distant lands.

Last year, an American youngster visited Switzerland. She had taken a break from studies and was visiting the country with the world's highest standard of living using money from her educational loan. You will be surprised by her justification for using educational loan to travel and the complacent attitude she displayed. ''I may have to spend the rest of my life repaying this loan. But what if I may not live beyond a year?'' she asked.

For a moment, her logic sweeps you away. In fact, such a thought exists not only among students who travel on loans but also youths as well as people in their fifties. There are people who use credit cards for travelling. A friend once said, ''I had no savings or leaves. On the verge of a breakdown, I decided to go on a trip using my credit card. I will ponder over repayment after the trip.'' Fortunately for her, the credit card firm provided easy instalments to repay the loan. However, others may not be so lucky.

Trips with loans

Today's youth are blamed for planning trips only to click images for Instagram. But they feel it is a good experience after graduating from college and before employment scene. The experiences they gain during travels will help them find a better job, they claim. Could it be true? One cannot deny such a possibility. Even then, a reality looms large; these extra expenses will burn a hole in our pockets.

The Journal of Consumer Research has published the findings of a study done by researchers at Bucknell University regarding trends in middle class families. It says that youth prefer gaining more experience in life to improve their employment prospects. They believe that later, when handling major responsibilities in life and career, travel opportunities will not be available. Moreover, one may then repent over having let go of the chances to enjoy travelling while young.

They travelled with loan

Blogger and teacher Nathan Andersen says availing a loan for travel should be resorted to depending on one’s financial status. ''If you are saving for the future, like building a house for the family, it is better not to take this path. But if you feel life experiences are more important, why avoid a trip using a loan?'' he asks.

Andersen is, however, quick to caution that the loan repayment should not be a burden. There may be additional expenses too for which you have to be prepared. ''An adventure will be rewarding. In the worst scenario, you may not be able to repay the loan. If that happens, you may not be granted another travel loan; nothing more,'' he adds.

Nathan has his own experience to relate: ''I was planning a foreign trip for quite a long time. However, unexpectedly, the firm I was working for was locked out a few days before the tour. I needed about a $1,000 more. Though I could have abandoned my plans, I decided to seek credit and go ahead. Fortunately, some provisions of 0% financing were cleared and I embarked on my dream journey.''

Nowadays, many people use credit card facility for purposes other than an emergency. Nathan says he does not want to go into the merits of the matter.

Another group of travellers belonging to the same category as those planning trips using loan and credit card is bloggers. Most of them set out for globe-trotting without sufficient funds. Finally, they abandon their trips midway after debts pile up. Professional blogger and traveller Shubham Mansingka, however, has never travelled on credit. ''My philosophy is very simple. If I have limited money, I seek cheaper accommodation and go for street food. I cannot even imagine taking a loan or using a credit card for travelling,'' he says.

Mansingka is surprised over the attitude of the millennials. ''Credit cards and loans are a big trap into which anyone can fall,'' according to him.

Now, take the case of the senior citizens who travel. Their number is showing a steady increase these days. Most of them fund their trips from their life's savings. They are driven by the keen desire to see and experience the world for as long as their age allows. Interestingly, a small section among them seeks loans or credit card facilities to travel. ''I am not at all worried over availing the loan. My last day could come any time. I have lived my life and if the loan is not repaid, it will not affect me. Somebody else will handle it,'' is the common refrain.

travel-oldage

All this is dated logic, but reflects the reality. In the past, seniors kept their savings for tackling health issues. But now they have a very liberal attitude towards life. ''We have spent our entire life working hard and paying taxes. Now let somebody else shoulder our responsibilities,'' they say.

The youth and the senior citizens have a different logic, but an identical goal – to see places. At the same time, one wonders whether experiencing the world with borrowed money would give you satisfaction. Statistics say that the most irresponsible people on earth are the millennials and those aged over 60 years. People in the intermediate age group are careful about life. Beck Miller, a traveller who has learnt from his experiences, says, ''I had availed a personal loan for a six-week European tour. A last-minute plan and the fact that such an opportunity might not present itself before me again led to this decision. I repaid the money in about a couple of years and have several sweet memories of the trip. However, the interest I had to shell out was sufficient to fund another tour.''

Since then, Miller started saving money for his travels. ''I feel this is the better option. There will be no liabilities after returning home from the trip,'' he explains.

Wise travellers like Miller prefer to keep a portion of their savings for travel. ''Trips are for us to enjoy; not to add pressure to life,'' is their motto.

If a person seeks credit for a trip, it means he cannot meet the expenses. ''Why are you shooting yourself in the foot,'' ask Miller and his ilk.

It is difficult to decide which is right – travelling at any cost or setting out on a journey at the proper time. The number of travellers roaming the world inspired by Instagram images is witnessing a huge increase. They are easy prey to financial institutions offering loans and credit card facilities.

Should you choose loan or credit card?

Youngsters do not spend their time or energy to choose between loan and credit cards. However, for those interested, it is advisable to go for loans. The benefits are low interest rates and lesser processing time, among others. Some major tour operators also offer easy repayment options, making the travel-crazy public go mad.

Personal loans can be availed without cumbersome procedures and are even available online. With long-term instalments, they offer a win-win situation for the new generation, who may take years to build up sizeable savings. Another attractive feature of personal loans is lesser interest rate than credit cards. Though they are a relatively a safer option, caution should be exercised while going in for loans from banks, which are eager to make a killing out the huge gap between the dreams and means of travellers. In other words, you may realize your life’s wish to enjoy the sunset at Santorini with a huge loan and spend the rest of your days repaying it, hardly wanting to remember that holiday.

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