Taking a personal loan to spend on non-discretionary (and discretionary, at times) expenses is quite common. Relying on it when there is an emergency is no brainer. At times, consumers take a personal loan when they need money for home renovation.
On other occasions, people tend to borrow for spending on weddings and other functions. What is the point where the line gets crossed? Is going on travel a good enough excuse to borrow money? Definitely not.
It is not recommended to take a personal loan for something as discretionary as travel. We give reasons for this here.
Loan for travel: Reasons why it’s not a good idea
I. Avoidable expenditure: This is an avoidable expenditure which if not undertaken – would not lead to any problem.
II. Set a wrong precedent: When you raise a loan for something as discretionary, then you are setting a wrong precedent for future loans that they may want to borrow. So, this practice must be nipped in the bud.
III. Could push into a loan debt: Being unsecured loan, personal loans carry a high rate of interest. So, when you take personal loans for travel, you unwittingly may be pushing yourself into a debt trap.
IV. Could spoil your financial plan: The future is always uncertain. And the sound financial advice would be to take a loan when required and not before it. When you would really require a loan for the rainy day, you would not have the capacity to repay it if you already have too many loans which you raised for something as avoidable as a holiday.
V. Delay gratification, not saving: Taking a personal loan for travel is likely to push your tendency to save at a later date. The recommended move would be to delay gratification and not saving. Therefore, you should refrain from taking a personal loan for vacation.
However, there could be a couple of exceptions. These include taking a trip for professional skill development, or for an urgent trip which is being undertaken for some unavoidable circumstances.
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