Previously people took personal loans for reasons such as paying off high-interest debt, covering a medical bill, or renovating a home. Now, more and more Indians are using them to pay for a vacation.
A recent survey by Paisabazaar shows just how common the trend has become. In 2025, nearly one in three people took a personal loan for travel. That makes holidays one of the top reasons for borrowing, ahead of even home makeovers. And surprisingly, it is actually the smaller cities driving the trend. Based on a survey of over 5,700 respondents across 97 Indian cities and towns the report found that small cities and towns like Lucknow, Patna, Surat and Durgapur accounted for over 70 per cent of such loans.
Moreover, younger borrowers are particularly comfortable with this idea. Gen Z’s share in the holiday loan category has doubled in just two years, from 14 per cent in 2023 to almost 29 per cent now. Millennials still make up the largest chunk, but it is the younger lot whose numbers are climbing faster.
With a noticeable shift in loan size, the report found that the majority of respondents borrowed between Rs 1 and Rs 3 lakh, but small-ticket loans under Rs 50,000, almost unheard of two years ago, now account for 15 per cent of the total borrowings. This could mean that people are consciously looking for affordable credits, or it could simply be a way for them to take more frequent trips without the burden of one big equated monthly instalments (EMIs).
However, the availability of such easy credit can sometimes mask the reality of repayment. Mukesh Pandey, director at Rupyaa Paisa, says it is important to know when aspirational spending tips into financial recklessness.
“If paying for a trip means touching your emergency fund, delaying investments, or depending entirely on debt, that’s a red flag,” he says.
Things To Keep In Mind Before Taking Loan For Travelling
Here are two key things borrowers should keep in mind before taking a loan for travelling or holiday purposes:
One quick check is to look at your debt-to-income ratio and how much of your monthly income goes into EMIs. Pandey suggests keeping it below 30-35 per cent. If a holiday loan pushes you over that, consider it risky. And while you might think a bonus or side gig will help cover it, he warns against counting on anything except your regular income.
Tenure is another factor people don’t think about enough. “If you are still paying for the trip long after the holiday mood has worn off, that is when regret sets in,” Pandey says.
His rule is simple: if you can’t pay it off in 3-6 months without disturbing your essentials or investments, skip it. If you must borrow, keep discretionary debt within 5-10 per cent of your annual income.
If you are borrowing to travel remember that your trips would end soon, but the debt taken for it doesn’t - at least not as quickly. The vacation might be worth it, but it is better when you are not watching the sunset with EMIs still on your mind.
