Over 25% of personal loan borrowers used funds for travel in first half of 2025

Over 25% of personal loan borrowers used funds for travel in first half of 2025: Says Paisabazaar Report

Personal loans are rapidly becoming a preferred way for Indians to fund their vacations, according to Paisabazaar’s latest consumer insights report, How India Travels Using Holiday Loans (Vol. 2.0). The study reveals that 27% of personal loan borrowers in the first half of 2025 used loans specifically for travel, marking a significant rise from 21% in 2023.

This shift has pushed holiday-related borrowing ahead of home renovation, which dropped to 24% from 31% over the same period.

The insights are based on responses from over 5,700 users across 97 Indian cities and towns. The data highlights a growing appetite for leisure travel among younger and non-metro borrowers.

Growing Popularity of Holiday Loans in Tier-2 and Tier-3 Cities

The surge in holiday loans is largely driven by non-metro India, with 71% of borrowers hailing from Tier-2 and Tier-3 cities, up from 68% in 2023. Cities like Lucknow, Surat, Jaipur, Patna, and Durgapur are leading this growth. In contrast, Tier-1 cities contributed 29% of holiday loan borrowers, slightly down from 32%, showing a shift in financial confidence towards smaller cities.

Delhi and Hyderabad Lead Among Metro Borrowers

Within Tier-1 metros, Delhi dominates with 35% of holiday loan borrowers, followed by Hyderabad at 18%. Other major contributors include Mumbai (15%) and Bangalore (14%), while Chennai, Kolkata, and Ahmedabad each hold a 6% share.

Gen Z Fuels Surge in Travel Loan Demand

The report highlights a strong uptick in travel loans among younger borrowers. Gen Z (under 30 years) accounted for nearly 30% of holiday loan users in H1 2025, more than doubling their share since 2023. Millennials (30-40 years) remain the largest segment, making up 47% of borrowers.

Preference for Smaller Loan Amounts Reflects Cautious Borrowing

Data shows a rising preference for smaller loan amounts to fund vacations. About 30% of borrowers took loans between Rs 1 lakh to Rs 3 lakh, while 20% borrowed between Rs 50,000 and Rs 1 lakh. This shift indicates that many holidaymakers prefer manageable loan amounts to avoid long-term financial strain.

Private Salaried Employees Dominate Borrowing

Private sector salaried employees constitute the largest group availing holiday loans, accounting for 65% of borrowers. Business owners’ participation increased from 12% in 2023 to 17% in 2025, followed by self-employed professionals (12%) and government employees (6%).

Seasonal Trends: Peak Holiday Loan Demand in January and Summer Months

The months of January, May, and June saw the highest holiday loan disbursals in 2025, with January alone contributing 21%. These months coincide with popular winter and summer vacation periods in India.

Top Holiday Destinations Favored by Loan Borrowers

For domestic vacations, Goa leads as the most preferred destination (18%), followed closely by Kashmir (16%) and Himachal Pradesh (14%). Internationally, South East Asia remains the top choice for 44% of travelers, with popular spots including Thailand, Vietnam, Singapore, and Bali. The Middle East attracts 32%, while the USA and UK together account for 20%.

The report clearly highlights a strong and growing trend among Indians to finance travel via personal loans. With rising financial confidence in smaller cities, younger borrowers embracing credit for lifestyle needs, and a preference for smaller, manageable loans, holiday financing is set to remain a key driver in India’s travel market. Whether planning a summer getaway to Goa or an international trip to South East Asia, more Indians are turning to personal loans to make their holiday dreams a reality.