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‘Travel Now, Pay Later’ is a new financing option that allows individuals to book and enjoy travel services immediately while deferring the payments for a later date. This concept is similar to other “buy now, pay later” models but is specifically tailored for the travel industry. It is frequently offered by independent financial institutions, internet-based travel companies, or specialized platforms for financing travel. 

The emerging trend of Travel Now, Pay Later (TNPL) through Buy Now, Pay Later (BNPL) services is driving heightened demand for numerous travel companies. By embracing this option, travellers are effectively removing the financial constraints that might otherwise hinder their ability to embark on journeys and discover new destinations. This shift highlights a transformation in the essence of travel, placing greater emphasis on exploring diverse landscapes without financial worries.

How does TNPL work?

Online travel aggregators and travel companies often form partnerships with banks, fintech firms, and loan apps, or utilize their fintech capabilities to provide credit options. Alternatively, borrowers have the flexibility to directly approach banks or third-party lenders to access these financing schemes. During the booking process, they can choose to make partial payments or defer the payment entirely to a specified later date. The financing options could be interest-bearing payment plans or free EMIs, with the interest rate that applies depending on how much is borrowed and how long the loan is for.

For example: Sarah, while planning her dream vacation, opted for a TNPL scheme. Utilizing the online travel agency’s partnership with a fintech company, she seamlessly applied for the deferred payment option during the booking process. After a quick credit check, Sarah received approval, allowing her to choose a convenient three-month installment plan for her flight and accommodation expenses. The immediate gratification came as her travel plans were confirmed without the need for an upfront payment. Over the subsequent period, Sarah diligently made equal monthly payments, benefitting from the interest-free plan. By adhering to her financial responsibilities, Sarah ensured a smooth and responsible experience with the program, avoiding additional fees and embracing the flexibility offered by “travel now, pay later.”

Required credit score, loan size, and repayment terms

TNPL loans offer a convenient and streamlined digital application process while minimizing the need for extensive paperwork. Individuals with a robust credit score and a healthy credit profile can access a variety of loan options. The size of TNPL loans can range widely, starting from as low as INR 10,000 and extending to substantial amounts. Smaller loan amounts typically don’t require collateral or a guarantor. However, for larger travel loans, lenders may request such additional assurances. These travel loans can be availed for amounts up to INR 40 lakhs, with a maximum repayment period of 6 years. Borrowers enjoy flexibility in choosing a loan amount and repayment duration within these predefined limits, allowing them to tailor their borrowing to match their travel requirements and financial capacity.



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Global trends contributing to the rise of TNPL

1.Partnerships between travel companies and BNPL providers: Travel agencies and online platforms are increasingly partnering with BNPL providers to integrate deferred payment options directly into their booking processes. This collaboration aims to attract a broader customer base and enhance the overall booking experience.

2. Rise of dedicated travel financing platforms: Dedicated travel financing platforms are emerging, offering services that are tailored for the travel industry. These platforms provide consumers with specific financing solutions designed for vacation expenses, such as flights, accommodations, and travel packages.

3. Interest-free periods and flexible repayment plans: Many “travel now, pay later” programs are offering interest-free periods, allowing users to spread their payments over several months without incurring additional costs. Flexible repayment plans, including customizable installment options, are becoming more common to accommodate varying financial preferences.

4.Integration of BNPL services by major travel brands: Major airlines, hotel chains, and travel agencies are integrating BNPL services into their platforms to provide customers with a seamless and flexible payment experience. This trend aims to make travel more accessible and affordable for a broader audience.

5. Global expansion of BNPL providers: BNPL providers that initially gained popularity in specific regions are expanding their services globally. This expansion facilitates cross-border travel financing, allowing users to leverage these services for international trips.

6. Increased acceptance of deferred payments for travel expenses: Consumers are becoming more accepting of the idea of deferring payments for their travel expenses. This shift in mindset has contributed to the widespread adoption of ‘travel now, pay later’ options as a standard feature in the travel booking landscape.

7. Incorporation of technology and digital processes: The entire ‘travel now, pay later’ process is becoming more digitized, with streamlined online applications, quick credit assessments, and instant approval processes. This helps to enhance user convenience and accessibility.

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1. What is the concept of “Travel Now, Pay Later,” and how does it work? 

“Travel Now, Pay Later” is a financing option that allows individuals to book and enjoy travel services immediately while deferring the payment to a later date. Users typically have access to installment plans or other deferred payment options, and Buy Now, Pay Later (BNPL) services often make these options possible. This flexibility seeks to spread the cost over time and increase accessibility to travel.

2. Are there any specific requirements to qualify for a “Travel Now, Pay Later” program? 

Eligibility criteria may vary, but common factors include a credit check to assess the individual’s creditworthiness. Higher credit scores often increase the chances of approval. Some programs may also consider income levels and other financial factors. It’s advisable to check the specific requirements of the chosen program or platform.

3. What are the advantages of using “Travel Now, Pay Later” services for booking vacations? 

The primary advantages include the ability to secure travel plans without an upfront payment, flexibility in choosing repayment plans, and the potential for interest-free periods. It provides a convenient and accessible way to manage travel expenses, allowing individuals to enjoy their trips without immediate financial strain.

4. Can “Travel Now, Pay Later” be used for all types of travel expenses? 

Yes, “Travel Now, Pay Later” options can typically be used for various travel expenses, including flights, accommodations, tours, and vacation packages. The goal is to offer a comprehensive solution that covers a wide range of travel-related costs, making it a versatile financing option for different types of trips.

5. How has the rise of “Travel Now, Pay Later” impacted the travel industry globally? 

The increasing popularity of “Travel Now, Pay Later” has positively impacted the travel industry by attracting more customers and expanding the market. Travel agencies and online platforms that offer these services have seen increased customer engagement and bookings. The trend has made travel more inclusive, allowing a broader audience to explore destinations without facing immediate financial barriers.

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