Planning a last minute summer vacation but don’t have enough savings for travel? Some travel aggregators like MakeMyTrip and Expedia have started offering Pay Later Financing option as it is commonly known. Vacation Now, Pay LaterAt the time of booking checkout which allows customers to book a holiday without paying for it immediately.
Vacation Now, Pay Later The service provides digital credit that is disbursed by a partner bank or a non-banking finance company (NBFC) of the travel aggregator. The annual interest rate on these loans can be anywhere between 13% to 30% and the repayment period can go up to 18 months. Repayment in the form of monthly installments starts a month after the booking is done, which means that, contrary to the name of the loan, if you book well in advance, you will have to pay off the loan after your vacation. will not be required.
Some aggregators may offer you zero interest rate for full repayment within 15 days of taking the credit. Defaults in installments attract a penalty of 2-3% monthly interest or a flat late payment fee with each default.
An important point to note with these loans is that aggregators may not allow credit on every travel-related expense. For example, some aggregators offer credit only on packages available on their platform, while others do not allow flight booking or visa fee through pay later financing option. In the case of the former, you may have to settle on your itinerary so that you can raise funds for your vacation.
Also, check whether the aggregator allows you to cancel the loan if the trip is canceled and whether you will have to pay an additional cancellation fee.
“Holidays involve cancellation, sometimes on the part of the passenger and sometimes on the part of the airline or travel agency, which can cause a lot of trouble for the borrower as they have to deal with not only the aggregator but the lender as well. The experience can leave a sour taste in your mouth. It is better to use a credit card,” said Delhi-based financial planner Amit Suri.
A travel credit card can be a better option because if you pay back on time you not only save on interest but also earn reward points which can be used later for flight and hotel bookings.