Millennial Indians are coming up with new, creative ways to fund their exotic travels — whether it’s a trip across Europe or a weekend getaway to Lonavla.
New Delhi: When Douglas Daniel from Delhi was backpacking across the US east coast in 2016, he realised he was running out of cash. Instead of acquiring money through any of the usual ways, he plunked for crowdfunding his trip on a website called GoFundMe.
“It started as a joke — I started the campaign through a friend, and said I was Indian. A lot of people were willing to help a ‘poor Indian’ who was in a tight spot,” Daniel said.
He ended up raising $200, and it was enough to travel to Virginia for another week. And Daniel doesn’t have any qualms about having done it.
“I am pretty shameless when it comes to that. And that’s probably a requirement if you really want be successful,” he said.
Millennial Indians seem stricken by wanderlust, aspiring to have perfect Instagram-worthy exotic trips. And they’re now coming up with new, creative ways to fund their travels — whether backpacking across Europe, travelling from New Delhi to Thailand, or even a weekend getaway from Mumbai or Pune to Lonavla.
Borrow money, ‘own’ an experience
The very nature of holidaying in India has changed. Instead of waiting for annual or biannual vacations lasting a week or a fortnight, the younger generation is actually more interested in multiple weekend getaways whenever there’s a long weekend on the calendar.
Cash crunch? No trouble nowadays, because peer-to-peer (P2P) lenders like Finzy and consumer lending applications like Early Salary have stepped in to provide quick, small loans without any pre-payment charge. These start-ups also tie up with online travel companies to offer financial services.
According to Akshay Mehrotra, CEO of Early Salary, the informal lending app sees a large upswing in the demand for travel loans whenever there’s a three-day weekend.
“Goa seems to be the most preferred location for young people, followed by Thailand,” Mehrotra told ThePrint.
The company offers loans up to Rs 2 lakh with no pre-payment charges and an interest rate of 2.5 per cent per month.
Early Salary’s target clients are youngsters, without much “baggage”. Mehrotra explained: “There is a difference between our product and a classical personal loan taken for travel category, which usually honeymooners, or married couples with children, take for a once-in-a-lifetime trip to Europe. Our product is for younger audiences who like to live life, want to go out, and come back with pictures.
“You can’t miss out on life because you’re short of Rs 5,000. It’s not really a loan, it’s a salary advance. You’ll earn it back.”
Eighteen per cent of Early Salary’s borrowers use the loans for travelling — the third highest with the top reason for personal loans being ‘shopping’. The average age of the borrowers is about 25 years old, with an average salary of Rs 40,000 per month.
“I think the ownership culture is gone. Youngsters don’t find the need to buy cars or bikes because they’ll get an Uber or an Ola. The next best thing that they can own is an experience,” said Mehrotra.
Another new trend is to travel to different terrains for special occasions like birthdays and festivals. According to Early Salary, Indian youth are travelling more between Christmas and New Year’s, while bachelor/ette party trips abroad have become the latest fad.
“In the consumer testimonials we had, bachelor and bachelorette parties emerged as a big reason for going out on holiday,” Mehrotra said.
Lavish spending is a given on these special trips, and Finzy is another firm that provides an average loan of Rs 2.5 lakh to Rs 5 lakh. The interest rate is 11 per cent, though it has a minimum salary criterion of Rs 25,000 per month for personal loan applicants.
Apoorv Gawde, CIO and head of products of Finzy, told ThePrint: “When the customers realise that a holiday finance option like Finzy exists, they have better flexibility with their budget, thereby allowing our travel partners to up-sell better travel locations.
“This enhanced budget also allows travellers to stay in better hotels and have an overall upgraded experience.”
There are also those who take loans for documenting travel. Kartik Kannan, a YouTuber and entrepreneur from Bengaluru, used Finzy last year to travel to Thailand, and document it for his travel vlog. He took a loan of Rs 75,000, repayable over 36 months, and pays an EMI of Rs 3,500 every month.
“When I wanted to travel in March 2017, the tax return season was going on, so I decided to take a loan. It seemed a better option than using a credit card and paying an interest rate of 36 per cent,” Kannan said. “My father is a banker and I had already taken education and home loans before, so I was comfortable with it.”
Newlyweds and young families
For newlywed millennials or those with young children, some trips could be a once-in-a-lifetime opportunity — like an extravagant honeymoon in Paris or taking the kids to Disneyland or Disney World. The rise of travel blogging has also fuelled this trend, but luxury international travel comes with a higher price-tag.
Finzy, whose average borrowers are in the age group of 28-35, steps in to meet that need. “We have noticed that the number of newly-married people looking to travel post their weddings is increasing,” Gawde said.
Formal banks and financial services too have been capitalising on this trend. Many banks and financial institutions in India already offer personal loans, with a special category for vacation or holiday loans, including ICICI, HDFC, Bajaj Finserv, and Tata Capital, which is currently “in the process of tying up with leading travel companies to offer customised travel loans to customers”, according to its managing director Kusal Roy.
Although most of these service providers don’t require collateral or any form of security proof for such personal loans for holidaying, the interest rate on them ranges between 11 per cent, going as high as 24 per cent. The loan amounts on offer go up to Rs 25 lakh, but sources say rarely do they see demand for loans above Rs 5 lakh.
Roy said 30 to 40 per cent of Tata Capital’s customers who apply for personal loans use it for holidays/travel requirement, and this trend is growing rapidly. The age group of people availing these loans is 25-40 years, and is “skewed towards males”.
The young Indian traveller certainly has changed in recent years, and thanks to these new-fangled ways of funding, it’s a win-win situation all around.
Correction: An earlier version of the story had wrongly quoted Apoorv Gawde’s designation as founder of Finzy, he is the CIO and head of products of Finzy. The story also misspelt his name. The error is regretted.
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