Jet-Set On EMI: Vacations Now Top Reason For Personal Loans In India

In a striking shift in borrowing behavior, more Indians are now taking personal loans to fund vacations than for home renovations, according to the latest consumer insights report released by Paisabazaar.

The survey, based on inputs from over 5,700 respondents across 97 cities, showed that 27% of personal loan takers in the first half of 2025 used the funds to travel, surpassing those taking loans for home renovation, which declined to 24% this year from 31% in 2023.

Within personal loans, funds used for vacation purposes topped the charts, followed by traditionally dominant segments like home renovation at 24%, medical emergencies at 10%, credit card repayments at 11%, education at 6% and weddings at 5%.

Loans among non-metro consumers, with 71% of holiday loan borrowers come from tier-2 and tier-3 cities like Lucknow, Surat, Jaipur, Patna, and Durgapur, up from 68% in 2023. In contrast, tier-1 cities contributed just 29%.

This marks a significant lifestyle shift, signaling growing comfort among Indian consumers in using credit to meet aspirational needs such as leisure travel.

“We are seeing consumers becoming increasingly comfortable and confident in using credit to meet aspirations and lifestyle needs, and the rise in holiday loans reflects this shift,” Chief Executive Officer Santosh Agarwal at Paisabazaar said.

According to the report, Gen Z borrowers aged 28 or lower also constituted a major portion of the borrowers in 2025, accounting for almost 30% of all holiday loan borrowers. It is up from just 14% in 2023, while millennials remained the dominant group at 47%.

The report also said that small-ticket loans are being preferred among borrowers. About 30% borrowed Rs 1–3 lakh, while loans under Rs 1 lakh rose from 14% to 35%.

Additionally, private salaried segment took the lead, with 65% of holiday loans coming from private sector employees, while business owners accounted for a growing 17%, up from 12% two years ago.

The report also highlighted peak months such as January, May, and June with 60% of total disbursals, aligning with school vacations and New Year holidays. Goa, Kashmir, and Himachal Pradesh topped the domestic charts among destination travels, while internationally, South East Asia and Middle East were the most popular.

As India's young and aspirational population continues to grow, the trend of “travel now, pay later” seems poised to become a lasting phenomenon.