As the holiday season draws near, many Indian families are making travel plans for much-needed getaways. However, soaring travel expenses are pushing people to explore financing options—especially personal loans—to cover their vacation costs. While travel loan offers and easy EMIs might seem attractive, financial experts caution against this growing trend.

Rise in Holiday Loans: What the 2025 Survey Says

According to the 2025 Consumer Insights Survey by Paisabazaar, there’s been a notable increase in Indians opting for personal loans to finance vacations:

• 27% of respondents reported using personal loans for holiday expenses.
• Gen Z (20–30 years) saw a sharp rise in borrowing—from 14% in H1 2023 to 29% in H1 2025.
• Millennials (30–40 years) remained the largest group, accounting for 47% of holiday loan takers.

Loan amounts are also shifting:

• 30% of loans fell in the ₹1 lakh–₹3 lakh range, up from 13% in 2023.
• Loans of ₹50,000–₹1 lakh grew from 12% to 20%.
• Loans below ₹50,000 jumped from 2% to 15%.

Private-sector salaried employees made up the majority of borrowers—65%—likely due to their steady income and easier access to credit.

The Financial Pitfalls of Holiday Loans

While a loan may offer instant gratification, it can have long-term financial consequences. Here’s why experts advise against borrowing for vacations:

High Interest Rates = Long-Term Burden

Most holiday loans come under the umbrella of personal loans, with interest rates between 10% to 20% per annum.
For example, borrowing ₹1 lakh at 15% interest over 3 years could result in paying over ₹1.3 lakh in total.
If you’re already juggling other EMIs (home, education, or car), this added debt can strain your monthly budget.

Risk of a Debt Trap

Using loans for non-essential spending like holidays can divert funds from key life goals—children’s education, medical emergencies, or retirement savings.
Unexpected situations like a job loss or health issue could make it difficult to repay the loan, potentially damaging your credit score and limiting future borrowing options.

Smarter Alternatives to Holiday Loans

Instead of borrowing, consider planning and saving in advance:

• Setting aside ₹10,000 per month can help you build a travel fund of ₹1.2 lakh in a year.
• Use financial tools like Recurring Deposits or Mutual Fund SIPs to grow your savings with returns.
• Plan travel during off-seasons to avail discounts on flights, hotels, and packages.

Don’t Let Loans Replace Financial Discipline

Holiday loans may appear manageable, but they can encourage a pattern of borrowing for lifestyle expenses, weakening your long-term financial discipline. Over time, this may lead to impulsive financial decisions and instability.