Vacation Loans Are Fueling Young India’s Travel Boom, But EMIs Are Now Part Of The Itinerary

Personal loans are quietly becoming a travel tool for young Indians, especially outside metros. A Paisabazaar survey-based report shows 27% borrowers used personal loans for vacations in H1 2025, up from 21% in H1 2023. Tier-2 and Tier-3 cities now account for 71% of holiday-loan borrowers, signalling how aspiration is spreading fast, along with EMIs.

Taking a loan for a vacation is no longer a rare, last-minute move. It is starting to look like a planned payment choice. A Mint report dated 06 August 2025 cited a Paisabazaar survey of 5,700 respondents across 97 towns and cities, showing 27% of borrowers took a personal loan for vacation expenses in H1 2025, up from 21% in H1 2023.

The same report highlighted that holidays have climbed above other needs in personal-loan usage, beating home renovations and even medical spending in share.

The Real Story: Smaller Tickets, Bigger Ambition

The data suggests borrowers want to travel, but without long repayment pain. Mint’s 06 August 2025 report noted that many holiday-loan users prefer amounts they can repay quickly. In ticket sizes, 30% borrowed ₹1,00,000–₹3,00,000, 20% borrowed ₹50,000–₹1,00,000, and 19% chose ₹3,00,000–₹5,00,000.

On the geography side, the tilt towards smaller cities is clear. The survey found 71% applicants came from Tier-2 and Tier-3 cities, compared to 29% from Tier-1.

Business Standard’s report dated 06 August 2025 added more colour on where demand is coming from. It said Tier-2 and Tier-3 share rose to 71% in 2025, up from 68% in 2023, while metro contributions fell to 29% from 32%.

Among top Tier-1 cities, Delhi had 35% of metro holiday-loan share, Hyderabad 18%, Mumbai 15%, and Bengaluru 14%, while Chennai, Kolkata and Ahmedabad were at 6% each.

This is not just metro youth taking quick loans. It is also non-metro India choosing credit to travel sooner.
 

The seasonality is interesting too. The Business Standard report points to January as a major month for disbursals, reflecting how holiday planning is now aligning with loan timing.

How The Trend Built Up Over Time?

Two things changed between 2023 and 2025. 

• First, travel became a more common reason to borrow. 
• Second, home renovation lost its share. 

Business Standard reported that travel borrowing overtook renovations, which dropped from 31% in 2023 to 24% in 2025.

This matters because home renovation was earlier a staple reason for personal loans. Now, travel is competing at the top of the list.

There is also a clear “smaller-ticket” preference over time. Business Standard reported that 30% of holiday loans in 2025 were in the ₹1–3 lakh band, up from 13% in 2023. Loans of ₹50,000–₹1 lakh grew from 12% to 20%, and loans below ₹50,000 rose from 2% to 15%.

That combination tells a simple story. Borrowers are taking loans that feel manageable, but they are taking them more often for leisure.

What Stakeholders Are Saying On The Shift?

Santosh Agarwal, CEO of Paisabazaar, told Business Standard on 06 August 2025 that consumers are becoming more comfortable using credit for aspirations and lifestyle needs, and holiday loans reflect that confidence.

Mint also quoted Agarwal saying consumer credit is still under-penetrated, pointing to low credit card penetration and India’s household debt to nominal GDP being lower than global benchmarks.

On the lender side, platforms also openly pitch travel borrowing as a convenience product. LoansJagat, for instance, markets “personal loan for holiday” as an option with EMIs and notes interest ranges such as 14%–20%.

Conclusion 

Vacation loans are becoming a mainstream travel hack, powered by clear numbers and wider acceptance of EMIs. But for borrowers, the trip ends in a few days. The repayment runs for months.