While taking small loans from a traditional bank for festive buying or for travelling abroad is very difficult, digital lenders have made this possible with relative ease.
To remove the fear of going through a cumbersome process for getting a loan and to make it feel good, the digital lenders have also renamed some of such loans. For example Buy Now Pay Later (BNPL) may be used by a person to avail a small loan for festive buying or for purchasing an expensive gadget.
Similarly, Travel Now Pay Later (TNPL) has been introduced recently to make a dream travel possible by availing a quick loan.
“Many finance companies have introduced the TNPL scheme to reduce the burden on tourists. TNPL is a travel version of BNPL. Customers have grown accustomed to using BNPL in retail and now are excited to be able to use it in travel. It is essentially a loan or credit that you take out when booking or taking a trip and pay for it in installments. You can either pay partially or not at all while booking and do so later within a specified duration. You can avail of no-cost EMIs or pay an interest rate on the borrowed amount depending on the quantum of funds and the duration for which you are taking the loan,” said Yashoraj Tyagi, CTO & CBO, CASHe.
Talking on the growth of TNPL, Tyagi said, “Since we launched the TNPL payment method on the IRCTC Rail Connect App in October 2022, we have been receiving a positive response from consumers as it makes for an affordable and accessible option for the travelers of Indian Railways. We have witnessed a spike in registrations by 25-27 per cent month-on-month basis already. So this is a healthy sign and we are expecting this to further go up in the coming months. The flexibility of the TNPL option on the IRCTC Rail Connect app is helping consumers to act on their pent-up travel desire as people can pay back the money in three to six equal interest-free installments. We are optimistic that this emerging trend of travel loans will encourage people to step out and fulfill their travel bucket lists while providing a significant boost to the industry.”
CASHe offers travel loans up to Rs 60,000 through TNPL with a tenure ranging from 3 to 6 months.
Talking on the future of TNPL, Tyagi said, “Travel remains a big-ticket item for consumers, especially so when they plan for a family or long-haul trip in the current climate of financial uncertainty. BNPL options, which are already hugely popular in the retail sector, have emerged over recent years as a way to spread the cost of purchase across several monthly payments, delivering additional flexibility for the everyday traveller. Travellers will actively consider and opt for the TNPL payment method for flights, train, and hotel bookings, and for all travel purposes including leisure and pilgrimage. We expect that TNPL as a category will grow in the future as it offers convenience and flexibility for travelers.”
With the travel restrictions – imposed to curb the spread of Covid-19 pandemic – have been withdrawn now, there is a spike in travelling and so is the demand for travel loans.
“Travel has blown out of proportion post two years of covid restriction. With InstaMoney, we have seen tremendous growth in travel loans of more than 150 per cent between July and October 2022 compared to the previous year. Of course, there was always a demand for this loan category, but with a multitude of travellers now on the go, banks and NBFCs must pay more attention to this category,” said Bhavin Patel, Co-founder & CEO, LenDenClub.
“The digital travel purchase pattern in India has transformed drastically since September 2020. A substantial number of people consume such services online these days. However, when they do not have enough cash in hand, they prefer routes like pay later or save now and travel later. Both these services are rapidly picking up pace in India, and we only see an increase in demand for Travel Now and Pay Later going forward,” he added.
