Personal loans for holidays are gaining popularity in India, particularly among younger travelers and residents of smaller cities. According to a recent report, 27% of personal loan borrowers used the funds for travel, marking a noticeable rise from previous years. This surge in demand has pushed holiday loans ahead of other personal loan categories, such as home renovation loans.

The trend is being largely driven by Tier-2 and Tier-3 cities, which now account for a significant portion of holiday loan borrowers. Cities like Lucknow, Surat, Jaipur, Patna, and Durgapur are major contributors, while Tier-1 metros like Delhi, Hyderabad, Mumbai, and Bangalore follow closely behind. The holiday loan trend is especially strong among Gen Z, whose share has doubled, while millennials remain the largest group of borrowers.

Borrowers are opting for smaller loan amounts to ensure manageable repayments. Around 30% borrow between ₹1 lakh and ₹3 lakh, while 20% borrow between ₹50,000 and ₹1 lakh. Private sector employees make up the majority of borrowers, followed by business owners, self-employed professionals, and government employees.

Peak demand for holiday loans occurs during popular travel seasons, with Goa, Kashmir, and Himachal Pradesh being top domestic destinations. Southeast Asia is a popular international travel choice, with countries like Thailand, Vietnam, Singapore, and Bali leading the list.

While personal loans for travel offer convenience, they come with high interest rates, making them an expensive option. Financial experts recommend using loans only as a last resort. They advise maintaining a healthy credit score, ensuring EMIs stay within 20–30% of monthly income, and building a dedicated travel fund. For short trips, using credit cards with interest-free periods is a safer alternative.

The trend of borrowing for holidays may continue, but disciplined financial planning remains the best way to enjoy vacations without incurring long-term financial stress.