Q: Does it make sense to take a personal loan to fund an international holiday? – Akshay
A: Taking a break from the monotony and stress of our professional lives is something we all crave for. However, taking a personal loan to fund an international trip is not a wise financial decision.
The unsecured personal loans carry hefty interest charges (anywhere between 11% and 24%) and should ideally be used to add value to something (like for a home renovation, educational expenses, consolidate high-interest debt) or to address an urgency. And not on luxuries like an international vacation, no matter how hard the bank tries to sell it to you and how badly you want to post some cool pics on social media!
Remember, your much-anticipated trip will end in a few weeks, but your loan EMIs will continue for years, something you may regret later. Also, it’s way more enjoyable and satisfying when you pay for something you love with your own money (and not borrowed money). Plus, a repayment default will leave you indebted and dent your credit score.
So, build your travel fund by allocating savings regularly for a year or two and use that saving to fund your dream vacation! Till then, look for cost-effective but brilliant domestic travel options, plan it well and avoid splurging.
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