Travelling On Loans: From Patna to Phuket, More Indians Are Borrowing to Travel

In a country where taking a personal loan was once a last resort, a growing number of Indians are now using it to fund holidays. A new consumer insights report finds that almost 1 in 3 borrowers of personal loans used their funds to travel in 2025, making vacations one of the top reasons for taking personal loans, overtaking even home renovations.

According to Paisabazaar's 'How India Travels Using Holiday Loans' (Vol. 2.0) report, based on a survey of over 5,700 respondents across 97 Indian cities and towns, a subtle but significant shift in the financial behaviour of Indian consumers. Travel is no longer being deferred for "someday", it is being paid for today, and more often with credit.

It's Not Just The Big Cities

One of the more interesting findings is that most of these borrowers, around 71 per cent, are not from metros; they are from Tier-2 and Tier-3 cities. Cities like Lucknow, Jaipur, Patna, Surat, and Durgapur are now prominent contributors to this growing pool of borrowers looking to travel using credit.

The metros, meanwhile, seem to be playing a smaller role. Just 29 per cent of such loans came from Tier-1 cities, with Delhi leading among them, followed by Hyderabad, Mumbai, and Bangalore.

This shift, while gradual, is reflective of a larger story, aspirations in non-metros are rising, and so is financial confidence.

Young Borrowers Are Comfortable With Credit

The report also shows that younger borrowers, especially Gen Z, are getting more comfortable taking loans for travel. In 2023, they made up just 14 per cent of all holiday loan borrowers. This year, it is nearly 29 per cent. Millennials still lead overall at 47 per cent, but it is the younger segment that has seen the sharper increase.

There seems to be a generational shift in how people think about debt. For many, a short-term loan to fund a vacation is no longer seen as reckless, it is just another way to manage money.

How much are people borrowing?

A notable trend from this report is regarding how people, for their better judgment, are not borrowing big. Majority of people are opting for smaller personal loans, wherein around 30 per cent borrowed between Rs 1-3 lakh.

Uptake of loans below Rs 1 lakh is seeing a rise, ranging upwards of Rs 50,000.

The share of small ticket loans (below Rs 50,000) has jumped significantly , from 2 per cent in 2023 to 15 per cent this year. There is a clear preference for amounts that can be repaid easily, probably over shorter tenures which means people are indulging in aspirational spending but still within limits.

Who is borrowing?

Mostly, it is the private salaried class, who make up 65 per cent of all holiday loan takers. Business owners are the next big group, and their share has gone up noticeably, from 12 per cent in 2023 to 17 per cent in 2025. Self-employed professionals (like doctors, accountants) and government employees follow behind.

The increase in borrowing by business owners may also hint at better cash flow expectations or more confidence in repaying.

When do people borrow to travel?

As expected, the highest loan activity was seen in January, May, and June, which aligns with school vacations and winter breaks. January alone accounted for 21 per cent of all travel loan disbursals.

It is also interesting to note that holiday loans are being used for both domestic and international travel. Top domestic destinations include Goa, Kashmir, and Himachal Pradesh, while for international holidays Southeast Asia was the clear preference with nearby destinations like Thailand, Vietnam, Singapore, and Bali seeing strong tourism demands. The middle east is the second top choice, while a smaller share travelled to the US and UK.

The findings draw no sweeping conclusion yet, but what is clear is that borrowing for travel is no longer a niche or rare option for Indians. The younger generation and those outside metros are majorly using personal loans to fund such lifestyle goals.

Though the long-term impact of this shift is still to be seen in the years to come, this shows a broader change in how India thinks about credit, lifestyle-related aspirations and access to meet such goals.