Is Travel Now, Pay Later Scheme Worth It For This Holiday Season?

Many of us would like to escape our stressful lives; holidays and year-end celebrations are quickly approaching, and the travel season has returned. With the 'travel now, pay later' trend sweeping the domestic market, vacationers are jumping on board as if it is the solution to all of their financial constraints and woes when it comes to vacationing. Travel companies, airlines, banks, third-party lenders, fintech firms, and other financial institutions are all promoting their own versions of the TNPL scheme. Do you have plans for a last-minute vacation but don't have the money to pay for it? Don't be concerned! Travel Now, Pay Later (TNPL) is a programme designed to make travel and leisure activities more affordable.

How does TNPL work?

The new BNPL scheme, travel now, pay later, is available from a number of financial institutions. Online travel agencies either work with banks, fintech companies, loan apps, and third-party lenders, or they offer credit through their own fintech divisions. Disbursements are broken down into small amounts and divided into a series of payments in this type of financing scheme. When you check out of the hotel, you must make the first payment. Depending on the amount of funds and the length of the loan, you can receive no-cost EMIs or pay an interest rate on the borrowed amount.

Online travel agencies and other travel companies either partner with banks, fintech companies, loan apps, and third-party lenders, or offer credit through their own fintech divisions. You can also approach banks or third-party lenders directly to take advantage of the scheme. You can pay in part or in full when booking, and then pay the remainder within a specified time frame. Depending on the amount of funds and the length of the loan, you can receive no-cost EMIs or pay an interest rate on the borrowed amount.

Should you opt for it?

While travellers understand the thrill of impromptu plans, having enough money every time may not be possible. In situations like these, the option to travel now and pay later may appear appealing, but read all of the terms and conditions before deciding. Furthermore, if you qualify for a 0% APR offer, applying for this TNPL is ideal. If you have a good credit history, your lender or travel partner will make you such an offer. Because no financial product is free, you must have some emergency funds on hand to pay off the loan on time and without penalty or interest.

Is TNPL the same as using a credit card or taking out a personal loan? In the case of a credit card, you get a 30-45 day free credit period, which is slightly shorter than the TNPL no-cost EMI window. However, converting the credit card bill into EMIs at 12-18% may be less expensive. Similarly, a personal loan may be less expensive if your bank offers a rate less than 12%, as many do now. Personal loans have a longer repayment period and a lower penalty for EMI default, making them a better option. The TNPL scheme is only recommended if you can take advantage of the no-cost EMI plan and can repay within 1-6 months; if you are receiving larger discounts from the travel company or lender; if you need to travel in an emergency; or if you face a sudden shortage of funds. Because travel is a discretionary expense, saving for the trip is preferable to paying interest on the travel cost.