Individuals take personal loans to manage essential—and occasionally non-essential—expenses. These loans often serve as a financial cushion during emergencies or are used for purposes such as home renovation.
On other occasions, people borrow to fund weddings and family functions. But where should one draw the line? Is taking out a loan just to travel really justifiable? In most cases, the answer is no.
A personal loan for travel is typically discouraged. Here’s why:
I. It’s an avoidable expense
Travel is a discretionary expense. Choosing not to go on a holiday won’t affect your basic needs or financial well-being. Borrowing for something that can easily be postponed—or skipped altogether—is not prudent.
II. It sets the wrong precedent
Taking a loan for a luxury like travel normalises the idea of borrowing for non-essential spending. It can lead to a habit of relying on debt for lifestyle choices, which undermines long-term financial discipline.
III. Risk of falling into a debt trap
Personal loans are unsecured and usually come with high interest rates. Borrowing for travel increases your financial burden without creating any long-term asset or value, and could push you into a cycle of debt.
IV. It could disrupt your financial plans
The future is uncertain. Taking a loan for a holiday now might compromise your ability to borrow when a genuine need arises—such as a medical emergency or job loss. If you’re already servicing multiple loans, adding another for something as avoidable as travel could prove costly.
V. It delays saving, not just gratification
Choosing to borrow for travel reflects a preference for instant gratification over financial planning. Rather than postponing the pleasure of a holiday, you end up postponing your savings. A wiser choice would be to save first and travel later.
In rare cases, travel may be necessary—for instance, an urgent family matter or a trip related to professional development. In such scenarios, borrowing could be justifiable, but even then, it’s important to explore all alternatives first.
(By arrangement with livemint.com)