Gen Z Joins The Trend: 27% Of Indians Borrow For Vacations – But Is The Debt Worth The Vibe?"

File Photo

New Delhi: It’s that time of the year — the festive season is here, work is slowing down, and your Instagram feed is filled with friends posting from beaches, mountains, and international getaways. Tempting, right? But with travel costs shooting up, a lot of people aren’t paying for these trips from their savings anymore. Instead, they’re taking out holiday loans.

The Growing Holiday Loan Craze
A 2025 survey by Paisabazaar shows just how common this has become:

27 percent of people used personal loans to fund their vacations this year.

Among them, Gen Z (20–30 years old) borrowing for trips has jumped from 14 percent in 2023 to 29 percent in 2025.

Millennials (30–40 years old) are still leading with a 47 percent share.

Borrowers are also going for smaller loans now.

Rs 1–3 lakh loans: up from 13 percent to 30 percent

Rs 50k–Rs 1 lakh: up from 12 percent to 20 percent

Under Rs 50k: up from 2 percent to 15 percent

Private-sector salaried employees make up 65 percent of these borrowers — probably because of steady income and easy access to credit.

On paper, it sounds harmless — take a loan, go have fun, pay it back later. But financial experts say this is a slippery slope. Here’s why.

Why Experts Are Not Fans of Holiday Loans 
1. Interest Eats Your Money
Personal loan interest rates usually range from 10 percent to 20 percent per year. That might sound small, but here’s the math: If you borrow Rs 1 lakh for 3 years at 15 percent, you don’t just repay Rs 1 lakh — you repay Rs 1.3 lakh. That’s Rs 30,000 gone… for nothing more than the cost of borrowing.

2. It’s a Debt Trap Waiting to Happen
Most of us already juggle EMIs — maybe for a car, a home, or education. Add a holiday loan to the mix, and you increase your monthly burden. If life throws you a curveball — job loss, a medical emergency — these extra EMIs could push you into a debt trap. Miss a few payments, and your credit score takes a hit, making it harder and more expensive to get loans for important things later.

3. There’s a Better Way to Afford Holidays
Instead of paying interest to a bank, you can save up for your trip ahead of time. For example, setting aside ₹10,000 a month means you’ll have ₹1.2 lakh in just a year — enough for a solid domestic vacation or even an international budget trip. If you want to grow your savings while you save, use tools like Recurring Deposits or Mutual Fund SIPs. Also, travelling in off-season can slash costs without cutting the fun.

4. Bad for Your Money Discipline
The more you borrow for lifestyle expenses, the more normal it feels. Once you get comfortable with loan-funded fun, it’s easy to fall into a cycle of borrowing for the next trip, gadget, or festival. Over time, that habit can wreck your finances.