Gen Z Borrowing Heavily for Holidays, CoinSwitch Founder Ashish Singhal Highlights Risks

Travel is becoming a top priority for Gen Z even if it means borrowing funds. From short vacations to luxurious once-in-a-lifetime tours, many people are using personal loans to pay for their international travels. Younger borrowers from Tier-2 and Tier-3 cities are particularly exhibiting this tendency, spending more and more to make memories.

In a recent post, CoinSwitch co-founder Ashish Singhal highlighted an interesting trend in travel. About 25 per cent of Indians took a loan for vacations last year. People borrowed Rs 2 lakh for Bali, Rs 1.5 lakh for Thailand, and Rs 3 lakh for a Europe trip. Surprisingly, 71 per cent of these borrowers are from Tier-2 and Tier-3 cities, the same places where people used to save for months just to visit relatives in Mumbai.

Gen Z’s share of vacation loan takers has nearly doubled in just two years, highlighting how quickly borrowing for travel has become a norm among young Indians.

With their percentage of vacation loan applicants rising from 14 per cent to 29 per cent in only two years, Gen Z is spearheading this trend. Many people are financing their travels with personal loans and EMI plans which frequently result in payments that are much more than the initial outlay. He mentions with an example that a Rs 2 lakh loan at 18 per cent interest results in an EMI of Rs 5,079 for five years, bringing the total repayment to approximately Rs 3.05 lakh for just a seven-day trip. That amounts to an extra Rs 40,000, all for Instagram stories.

Singhal points out the cultural shift: what parents once called splurging on train tickets, young people now see as living their best life by borrowing lakhs for vacations abroad. BNPL schemes have encouraged similar spending habits, pushing people to experience what they might not otherwise afford.

He recommends more sensible options, such as using travel credit cards for miles or vouchers while always paying the entire amount due, and starting a travel fund and saving Rs 5,000 per month to pay for trips in six to eight months without interest.

By means of careful planning and more sensible financial choices, travelers can enjoy their dream vacations without gathering up unnecessary debt or interest.