Photographs: Stringer India/Reuters Bienu Vaghela
Now that the cruel month of March your or child's exams, tax-filing, last minute investments hassles to save tax, steep income tax cuts -- is finally behind it's about time you must be planning for your next vacation either in India or abroad.
You had cried exams, exams and exams and suddenly you found them over and done with in no time at all. So when my 13-year old suddenly reminded me of my promise of taking her to Disneyland in Hong Kong this summer, the alarm bell rung. After all, the promises I made six months ago to motivate her, were confronting me in April with all the might.
I am sure there will be many parents like us, who, in the midst of all the above, have completely forgotten that summer vacations are knocking on their doors.
For us, at least we know the destination (courtesy: Tanya, our daughter). But how about those who have not yet zeroed in on their destination even? Till it becomes too late, take the first step of finalising your destination.
Then comes the tedious task of budgeting for the holiday. You are just about done with paying all your ECS (electronic) payments, insurance premiums, PPF and mutual funds for claiming the tax benefit, which has left you completely high and dry. On top of that you had taken meagre salary home, courtesy tax cuts of the last few months. Quite a catch-22 situation.
So the planning and funding machinery is on an overdrive to come up with some viable solution for this expensive promise. However, it is important to evaluate its financial implication and how it will impact your family budget for the next six months?
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The author is chief editor, Apnapaisa.
Gear up for looking at bargains offered by various travel houses
Photographs: Sherwin Crasto/Reuters
Once that is done, start working towards the budget and evaluate how much funds can be arranged in-house taking into account your credit limits. Financially planning for a vacation is somewhat different from planning for any other expense.
But the fact is that planning for a vacation well in advance tends to save a lot of money, it is the smartest choice for those trying to keep your finances in check while still making sure you enjoy your time away from home. But you have not done that so and you do not want to do away with those funds which you have saved for meeting unforeseen expenses round the year.
So what is the best option?
Basically here personal loans are a great help. Nowadays with the growing awareness amongst the travel fraternity many banks like State Bank of India (SBI Travel Loan), Bank of India, Bank of Baroda (BOB Desh Videsh Yatra Loan) and HSBC, to name a few, are offering special travel loans.
Before approaching a bank, set up a budget and decide how much money you need to cover all your basic expenses while on vacation, and then allocate some extra cash for meals, souvenirs and unexpected costs. Do intense research beforehand to come up with accurate prices and do not indulge in too much guessing.
The banks in India issue a variety of travel loans for the willing travellers and last minute planners like us. Evaluating the travel expenses you can receive banks offering easy travel loans. The travel loan from banks is an ideal method of meeting all your traveling expense such as cost of ticket, hotel stay, visa, airport tax, and much more. While the loan amount varies according to your income and repayment capacity generally the banks offer loan from a minimum of Rs 20,000 to as high as Rs 10 lakh.
What's more these travel loans give you the opportunity of repaying the money in different tenures within four years. Different banks have their own policies when it comes to charging interest.
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Documents to submit
Photographs: Vijay Mathur/Reuters
While you look to avail cash loans for travelling, you need to submit following documents required by the bank.
- Copy of your passport (for overseas travellers)
- Copy of consolidated invoice containing ticket charges, insurance charges, other sundry charges, etc.
- Passport size photograph
- For salaried individuals your latest salary slip and Form 16
- For self-employed individuals and professionals IT returns for the last two financial years
- Proof of residential address
The rate of interest varies from bank to bank, depending on the market conditions and their policies. It is generally between 14 per cent and 21 per cent on a reducing balance basis.
Filling a form at the bank premises and providing the necessary documents can help you obtain travel loans. A nominal processing fee is charged by banks, which can sometimes be waived off.
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How much loan can you get
Photographs: Jorge Silva/Reuters
If all your documents and neat you can obtain a loan to the tune of Rs 5 lakh (maximum) in case liquid collateral security like TDRs, NSCs, IVPs, KVPs, LIC policy (surrender value) etc. is offered as collateral for at least 50 per cent of loan amount to be sanctioned.
You can also obtain a loan to the tune of Rs 10 lakh (maximum) in case liquid collateral security like TDRs, NSCs, IVPs, KVPs, LIC policy (surrender value) etc. is offered as collateral for at least 100 per cent of loan amount to be sanctioned.
As personal loans are unsecured loans, the interest rate is higher but if you are mortgaging your above-mentioned saving instruments then you will be charged at least 1 to 2 per cent lower interest rate.
So whether you are a salaried employee, professional, self-employed, engaged in business or are a high net worth individual, agriculturist, pensioner or government staff member, you are eligible for this loan.
Some important tips
As you have just passed the hard period, it is advisable to be flexible. Decide what is essential to you to enjoy your vacation (high-quality hotels or flying rather than driving, for example) and then budget for other expenses. If you want to spend more to ensure good accommodation, you can then settle for eating in diners rather than in expensive restaurants, or use coupons to save on admission prices to attractions.
The easiest way to be in absolute control of how much you spend on a vacation is to pay for everything in advance. Plan to pay for your hotel reservations before you leave (rather than shelling out cash when you get there), contract with tour companies from home (unless you want to do the touring on your own) and include meals in your vacation package if at all possible.
So travelling is great lest you are short of funds. But here your credit cards, travellers cheques and ATM services come handy for funding but they pinch hard once you are back. Look for alternate funding in the form of loans granted by various banks at reasonable rate of interest and have a ball of a time with your family.
Now you are equipped to keep your promise of taking your prince and princess to their favourite holiday destinations.