Personal loans for holidays are becoming a growing trend in India, especially among younger travellers and residents of smaller cities. According to the Paisabazaar report ‘How India Travels Using Holiday Loans (Vol. 2.0)’, 27% of personal loan borrowers in the first half of 2025 used the money for travel, a jump from 21% in 2023. This rise has pushed holiday loans ahead of home renovation loans, which have dropped from 31% in 2023 to 24% in 2025.
The surge is largely driven by Tier-2 and Tier-3 cities, which now account for 71% of holiday loan borrowers, up from 68% in 2023. Major contributors include Lucknow, Surat, Jaipur, Patna, and Durgapur. Tier-1 metros make up the remaining 29%, with Delhi leading at 35%, followed by Hyderabad, Mumbai, and Bangalore. The trend is particularly strong among Gen Z, whose share has doubled to 30%, while millennials remain the largest group at 47%.
Borrowers are leaning towards smaller loan sizes to keep repayments manageable 30% borrowed between ₹1 lakh and ₹3 lakh, and 20% borrowed between ₹50,000 and ₹1 lakh. Private sector employees form 65% of borrowers, followed by business owners (17%), self-employed professionals (12%), and government employees (6%).
Peak demand months for holiday loans are January, May, and June, matching popular travel seasons. Goa is the top domestic choice, followed by Kashmir and Himachal Pradesh, while Southeast Asia dominates international travel preferences, with Thailand, Vietnam, Singapore, and Bali leading the list.
However, financial experts warn that while personal loans for travel offer convenience, their high interest rates make them an expensive option. They advise using them only as a last resort, maintaining a healthy credit score, and ensuring EMIs remain within 20–30% of monthly income. Building a dedicated travel fund or using credit cards with interest-free periods for short trips are safer alternatives to avoid falling into a debt trap. This YOLO-driven borrowing trend may continue, but disciplined financial planning remains the best way to fund holidays without long-term financial stress.
