Holiday now, pay later

Not only are airlines cutting down on ticket prices, tour operators have a slew of packages to woo the would-be traveller.

Biggies in the business such as Cox & Kings, SOTC and Thomas Cook have tied up with banks to provide you with travel loans and flexible equated monthly instalments (EMIs).

Travel loans from tour companies have been around for a few years now. But travel industry insiders say that "travel now, pay later" schemes have really picked up from last year.

Says Raspreet Kaur, manager (sales), Cox & Kings (I) Pvt Ltd, "Nearly 30 per cent of our Delhi clients prefer this scheme." According to an SOTC official 15 per cent of the company's outbound leisure travellers use the EMI option.

Since its launch in 1997, nearly 10,000 passengers have utilised the "holiday now, pay later" facility from SOTC. Growing awareness of foreign destinations among travellers and higher disposable income has fuelled the trend.

While SOTC has a tie-up with Kotak Mahindra, Cox and Kings has it with UTI Bank for providing travel loans. At Cox and Kings travel loans are only available for group packages for their Duniya Dekho (international) and Bharat Dekho (domestic) itineraries. However Kaur says the company will soon extend the scheme to individual travellers who do not want to avail of group packages.

Most tour prices offered by travel companies include economy class airfare, airport taxes, accommodation, food and sight seeing. Cox and Kings, for instance charges an initial deposit ranging from Rs 5,000 to Rs 10,000 which is adjusted in the final tour package.

Details of various loan schemes are available with the tour companies. It is the companies that forward the loan applications to the banks with details of the client(s). The bank then contacts the client for processing the loan application. A processing fee of Rs 500 is charged.

If the loan application is rejected then the processing fee is refunded. Once the loan is sanctioned one has to pay two EMIs as advance. Repayment of the loan is done through post-dated cheques made in favour of the bank. The duration of loans is usually over a period of 12 to 36 months. Loan amounts vary but usually the minimum loan amount is Rs 40,000.

In order to avail of travel loans the documents required include proof of residence, identification proof, birth certificate, salary slips of the past three months, income tax returns of the past two years and bank statements for the last six months. The average processing period taken by banks is a week.

The flip side to "travel now, pay later" schemes is that like any other loan one ends up paying slightly more than one would have if one paid the full travel package upfront. The interests rates are slightly on the higher side as the banks do not ask for any collateral while sanctioning the loan.

10-day European experience
Tour price (per person): Cox and Kings_Rs 37,950+Euro 1,160; SOTC: Rs 49,900 EMI (36 months):Cox_Rs 3,608; SOTC_Rs 1742 Australia Tour price (per person): Cox and Kings (13 days)""Rs 59,000 +A$ 1,899; SOTC(9 days)""Rs 98,900 EMI (36 months): Cox & Kings_Rs 4,176; SOTC_Rs 3,452