As the global tourism industry begins to start reopening, one thing that all of us desperately need after 4 months of lockdown is a good old vacation. Be it going to the nearby resort 200 km from our city or traveling to a foreign country which has been postponed for way too long by now, our much-needed vacation not only has the power to restore our calm and peace but also instill a sense of normalcy amid all this chaos. Additionally, the global tourism industry now has prices cheaper than ever before in an effort to attract visitors, thus making this the perfect time for exploring the unexplored.
If you too are planning to go on a vacation, one of the first aspects you would need to take into consideration is the amount of money you will need in order to finance the trip.
Due to the COVID-19 pandemic, more than 3.5 crore jobs have been lost in India alone, thus making it natural that you may be short of funds. However, one good option to figure your way out of this will be to take a vacation loan.
If you have considered taking a vacation loan and you are yet struggling to get approved due to bad credit history, this article is for you. In today’s article, we will tell you exactly how you can get a vacation or travel loan today, even with bad credit; let’s get started.
Things to Look Into Before Choosing a Lender
Choose a Modern Lender
One of the first and most important aspects for you to know is the fact that you just can’t walk into a traditional bank and avail of a vacation loan with a poor or bad credit score. Thus the alternative is to search for a lender who not only accepts applicants with poor credit history but also has a flexible process for the loans on offer.
Since the end of 2019, India has seen massive growth in the number of new-age lenders, and this tremendous rise has given birth to lenders who not only have an alternate credit assessment model but also flexible options when it comes to rendering loans. Thus if you search diligently, chances are that you will land a lender who will give you a vacation loan even with a bad credit history.
However, one of the most important pointers to note here is the fact that since you have a bad credit score, the lender will be naturally inclined to charge you a higher rate of interest while approving your loan application. Keep this fact in mind when applying as it will help you in both sorting and choosing the best lender for your purpose.
Get a Co-Borrower
The second aspect you need to consider if you are trying to get a vacation loan with a low credit score is getting a co-borrower to apply with you. No matter what type of loan you choose, if you have a low credit rating and you get a co-borrower to apply along with you, you will automatically increase your chances of getting approved.
Along with this, in a recent report published by hotel chain OYO, indicated that more than 68% of all travelers in India travel with a companion, mostly a family member or a friend. While this fact might not be striking enough at first glance, if you think about it, you will quickly realize that getting a co-borrower for your vacation loan application might not be as difficult as you initially estimated it to be.
Just ask your travel buddy to apply with you, and increase your chances of getting approved significantly. Because at the end of the day, traveling with a companion is much better than traveling solo.
Things to Keep in Mind
When you are applying for a vacation loan with a poor credit history, there are a couple of different aspects you need to keep in mind, and they are as mentioned below:
Total Cost of Your Vacation
One of the first and most important aspects to consider is the total cost of your vacation. According to recent research, it was found that if you are traveling domestically, meaning within the Indian subcontinent, you are likely to spend an average of ₹2500 per day, taking into consideration your food, lodging, travel, and miscellaneous expenses. On the other hand, if you are traveling to an overseas destination, your daily spending can vary all the way from ₹6600 a day all the way to ₹15,000 a day, depending on the destination you choose, along with the time of your travel.
Thus, as you can clearly understand, there is no one size fits all cost when it comes to traveling, and thus it will ultimately come down to you to decide how much loan amount you will require to enjoy your vacation.
A great way to figure out an average amount is to log on to a travel website, which lets you book hotels, transportation, and restaurants in your destination of choice. On the website, enter your estimated dates of travel, followed by choosing the amenities you require (such as hotels you will stay in, the number of rooms you will require, how you will travel to and from the destination, meals, etc.). Once everything is taken into account, check the estimated cost and figure out the total loan amount you will require.
Ask Yourself: Do You Really Need This Loan?
If you have already figured out the total loan amount you will require to travel, the next step is to ask yourself if you really need the loan to travel at this moment. For example, suppose the number you arrived at from the previous step is ₹45,000, including everything, so now ask yourself if you already have this ₹45,000 present with you or you desperately need to get a loan.
The reason as to why we are emphasizing on this point is simply because, since you already have a low credit score, the lender you choose will offer a rate of interest which will be significantly higher, thus making it more difficult for you to pay it back in the long run.
Along with this, it is worth noting that we often underestimate our capabilities of securing the said amount without using a loan, thus making it a point to really strive to secure the amount before you apply for a loan.
At first, glance, getting a vacation loan in India with a bad credit score can appear to be a tough task, but if you just sit down, relax and do your research well, while following the pointers mentioned above, you will be on your way to enjoy your much-needed vacation in the quickest time possible.
Author Bio: Surya Patra is a qualified webmaster by profession and Marathon Runner/Cyclist by passion with more than 6+ years of expertise in the financial domain. Surya is also an entrepreneur, enthusiastic in storytelling, content writing, and digital marketing professional.