How to Make Use of Your CIBIL Score to go on a Vacation?

Planning a vacation? Worried about funds? Here is a good source for your travel funds, using your good CIBIL score. A vacation loan is a type of personal loan that can be used to fund your travel. It will cover almost all your travel expenses from transportation to lodging and food. If you have a CIBIL score of 700 or more, you can make use of it to apply for a personal loan, which you can then use to finance your holiday. Personal loans can be repaid through monthly installments within 12 to 60 months. 

CIBIL score is important to avail of a personal loan as it helps lenders gauge the applicant’s creditworthiness, repayment history, and borrowing behavior. A high CIBIL score can increase an applicant’s loan eligibility, and could also help l speed up the loan application process. 

Here are a few advantages of taking a personal loan by leveraging your CIBIL score to finance your vacation:

1. Better Rates:

This is the major reason you would choose to pay for your vacation using a loan rather than a credit card. Loans taken via credit cards are often quite expensive. Furthermore, if you convert a credit card purchase into an EMI option for a single purchase - such as flight tickets, subsequent transactions like hotel charges, etc. which may also need to be converted into EMIs would be charged at higher interest rates. On the other hand, personal loans for your trip can allow you to borrow money in one single sum and at a more affordable interest rate.

2. Quickly Available:

With a high CIBIL score, your eligibility for a loan is higher, and you may be able to avail yourself of it quickly, with minimal documentation and quick processing.  Upon final approval, the funds will be directly credited to your bank account, thereby becoming accessible to you within a  few days of the loan application. This is especially helpful when you need extra funds urgently to manage unexpected expenses while planning your vacation. When you apply for a personal loan for holiday, your CIBIL score plays a big part in determining your eligibility.

3. Flexibility and Budgeting:

You are on a vacation, other travel cards or credit cards may be convenient but come with restrictions. When you take a personal loan for a vacation, you know exactly how much you're borrowing, how much you'll be paying back every month, and when your loan will be paid off. This will help in making appropriate plans, budgets and you have the option of deciding how long it will take to pay off the loan, which might help you plan your monthly payments.

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4. Impact on CIBIL Score:

Comparing a personal loan with a credit card or any other buy now pay later system, a personal loan is advantageous. Your CIBIL score drops slightly when you apply for a new loan, such as a personal loan, but after you pay back well the score will be recovered. Taking a personal loan for a short period of time will not increase your credit utilization ratio, unlike credit cards when you make large spending. The amount of revolving credit you're currently utilizing divided by the entire amount of revolving credit you have available is your credit utilization ratio. Which might also count for your future loans.

5. Cheaper than a Credit Card:

Many people go for an unplanned trip, especially during weekends and festival seasons. At such times, they usually end up using credit cards for their various expenses including tickets, hotels, etc. Not all cards allow users to convert such expenses into EMIs at the same annual rate of interest. The resulting credit card bill would be huge, and paying it only partially would cause huge interest charges to accumulate, effectively leading the user into a debt trap. Personal loans from trusted lenders such as SMFG India Credit have lower borrowing costs, with average personal loan interest rates starting from 12.5% per annum.

Now let’s discuss what you should consider before applying for a personal loan for your travel expenses.

1. Consider your financial situation. You'll have to pay back your loan in regular installments, so consider how this may affect your earnings.
2. Check the lender’s personal loan requirement. As mentioned earlier, lenders consider several criteria such as income, location, age, nature of employment and so on before approving an applicant’s loan request. Ensure that you fit the required criteria before applying. 
3. Use a personal loan eligibility calculator to get an estimate of the maximum amount you may be able to borrow. If you need more funds, consider repaying existing debts or adding a close family member with a good credit score and income as a co-applicant.
4. Understand the loan terms offered: Check the terms offered before applying for the loan. Check the lender’s website to understand the maximum loan amount they are offering, whether the interest rate will be charged on an annual or monthly basis, maximum loan tenure, and so on. 
5. Use a personal loan EMI calculator to estimate your EMI and then select a suitable tenure
6. Research the lender thoroughly, and choose a reputed lender which is registered with the RBI.

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Conclusion:

As you can see, your CIBIL score might be very useful if you want to go on holiday. With a personal loan, you can borrow the funds you need at affordable rates. Depending on your eligibility and providing the lender the required personal loan documents promptly, you may be able to get the funds you need within a few days of application. To start your personal loan application process with SMFG India Credit, apply today!