Travel Now Pay Later: How TNPL may affect your tour budget decisions— explained

Travel Now Pay Later: The unprecedented boom in holiday travel after the easing of restrictions imposed during the pandemic led to the rise of TNPL offerings.TNPL options have become attractive due to their convenient access to financing and the flexibility they offer in spreading out payments over a period, alleviating concerns about travel budgets. 

As the festive season has kicked in, travel enthusiasts are busy planning their trips, so should they opt for these schemes or hang on to their travel plans instead? Let's try to see the pros and cons of TNPL.

What is Travel Now Pay Later (TNPL)?

Travel Now Pay Later (TNPL) is similar to the Buy Now Pay Later (BNPL) schemes that enable consumers to buy a product at once and then pay for it in easy monthly instalments. Some travel aggregators, such as MakeMyTrip and Expedia, have started offering a pay-later financing option.

Exciting news! Mint is now on WhatsApp Channels. Subscribe today by clicking the link and stay updated with the latest financial insights! Click here 

How TNPL is impacting travel budget decisions 

While earlier the plans were made as per fixed budgets and available funds, the plans today levy more focus on aspirations and experience, irrespective of the cost, with TNPL as an option. “Factors such as demographics and economic conditions play a crucial role in their decision-making process. This trend is especially noticeable among individuals residing in major cities, Tier-I, and Tier-II cities, as they generally have higher disposable incomes and are more inclined to opt for travel loans,” said Anand Agrawal, Co-Founder & CPTO, of Credgenics.

What you should be careful about while availing of TNPL?

While TNPL is an attractive and easy option for buyers, several factors need to be considered before opting for it. Anand Agrawal said that one should keep in mind that most of the TNPL schemes offer short repayment periods and heavy interest if not paid on time. 

Missed repayments also impact the borrower’s credit profile. Agrawal suggested that borrowers should opt for the No Cost EMI plan and the loan repayment time should be longer tenure. Also, they need to clarify the payment terms, penalties for repayment delays, and any hidden terms.

What is the CIBIL score that you need to have for TNPL loans?

TNPL loans can be availed digitally and do not require much paperwork. However, a high credit score and a healthy credit profile can open multiple loan options for people, added Credgenics' Agrawal.

Typical loan size and repayment time for a TNPL loan

The size of a typical TNPL loan can vary widely, starting at as low as Rs. 10,000 and extending to significantly larger sums. “There is usually no need for collateral or a guarantor when it comes to smaller loan amounts,  However, for larger travel loans, lenders might request a guarantor or collateral,” said Agrawal.

Travel loans are available for amounts of up to ₹40 lakhs and come with a maximum repayment period of 6 years. Borrowers have the freedom to select a suitable loan amount and repayment duration within these predefined limits, taking into account their travel needs and ability to repay.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.