Holiday EMI and Travel Loans: Costs and Catches

Quick answer

No-cost EMI on a holiday usually costs ₹1,000–2,000 extra on a ₹1–1.5 lakh booking, from GST on the interest and a processing fee. Credit card EMIs and personal loans at 11–24% a year add roughly ₹12,000–27,000 in interest on a ₹2 lakh trip over 12 months. Borrowing for a holiday is reasonable only when the EMI is comfortable; saving first is almost always cheaper.

Key takeaways

No-cost EMI isn't free: you usually pay 18% GST on the interest the bank charges, plus a processing fee.
Credit card EMIs and personal loans typically cost 11–24% a year, plus fees and GST.
TCS on overseas packages applies the same way if you pay by EMI, and is usually collected at booking.
If the EMI would take more than about 10% of your monthly take-home pay, the trip is probably too big for now.
A recurring deposit started six months ahead costs nothing and earns interest.

What are your options for paying in instalments?

Option	Typical cost at the time of review	Watch for
No-cost EMI on a credit card	Interest offset by a discount, but GST on the interest and a fee remain	Only on selected cards and tenures
Credit card EMI conversion	About 13–24% a year, plus 18% GST on interest	Processing fee, foreclosure charges
Personal or travel loan	About 11–24% a year, depending on your credit score	Processing fee of 1–3% plus GST
Buy now, pay later	Interest-free for a short period, then fees	Missed payments hurt your credit score
Loan against a fixed deposit	About 1–2% above the FD rate	Usually the cheapest borrowing if you have an FD

Booking with us on EMI? See holiday packages on EMI for how it works at Elitech and the approximate monthly cost of each package.

Is no-cost EMI really free?

Not quite. RBI has made clear that there's no such thing as a zero-interest loan, so no-cost EMI works like this:

The bank charges interest on the EMI at its normal rate.
The seller gives you an upfront discount equal to that interest, so your EMIs add up to the original price.
You still pay 18% GST on the interest component, because GST applies to the bank's interest, plus a processing fee with GST.

Worked example: a ₹1,20,000 Dubai holiday on six-month no-cost EMI

A couple books a four-night Dubai holiday with flights for ₹1,20,000.

Line	Amount
Package price	₹1,20,000
Interest charged by the bank at about 15% a year	about ₹5,300
Upfront discount from the seller	about ₹5,300
GST at 18% on the interest	about ₹950
Processing fee with GST	about ₹235
Extra cost to you	about ₹1,200

₹1,200 is modest. But it's only a fair deal if the package price wasn't raised to fund the discount. Ask for the pay-in-full price and the no-cost EMI price side by side. The Dubai trip cost guide gives you a benchmark.

What does a regular EMI or travel loan cost?

Loan of ₹2,00,000 over 12 months	Monthly EMI	Total interest
At 11% (personal loan, strong credit score)	about ₹17,680	about ₹12,100
At 14% (card EMI or average personal loan)	about ₹17,960	about ₹15,500
At 24% (weak credit score)	about ₹18,910	about ₹26,900

Add processing fees of 1–3% plus GST. On a credit card EMI, 18% GST also applies to each month's interest: at 14%, that's about ₹2,800 more over the year.

Are there catches specific to overseas trips?

TCS still applies. An overseas package attracts 2% TCS from the first rupee however you pay, and it's usually collected at booking. On a ₹2 lakh package, about ₹4,000 is locked up until you file your return. See TCS on foreign tour packages.
Card surcharges. Some sellers add a charge for credit card payments. Check before choosing EMI.
The loan continues if the trip doesn't. If you cancel, you keep paying EMIs while refunds follow the operator's cancellation terms. Trip cancellation cover protects against covered reasons such as serious illness, not a change of plans.
Spending money isn't on EMI. You'll still need cash and a forex card loaded before you fly.
Visa refusal. If you book a Europe tour on EMI and the Schengen visa is refused, you're left with cancellation charges and a running loan. Where you can, keep bookings refundable until the visa is in hand.

When does borrowing for a holiday make sense?

Honestly, not often. It's reasonable when:

The trip has a date you can't move, such as a family wedding abroad or a child's graduation
The EMI is small relative to your income and the loan is short, six to twelve months
You're using a genuine no-cost EMI on a price you've checked

It's a bad idea when:

The EMI would take more than about 10% of your monthly take-home pay
You're already carrying a credit card balance from month to month
The loan runs far longer than the trip's memories, such as 24 or 36 months for one week away

Open a recurring deposit for the trip six months out. ₹20,000 a month from April gives you about ₹1.2 lakh plus interest by October, enough for a Thailand or Dubai holiday for two without a single EMI.

What about loans from apps?

Instant loan apps advertise travel loans with quick approval. Borrow only from banks, NBFCs or apps that name an RBI-regulated lender, and read the key fact statement before you accept; it must show the annual percentage rate, including fees. Avoid any app that asks for access to your contacts or photo gallery, and report suspicious lenders on RBI's Sachet portal.

Does a travel loan affect your credit score?

Yes, in both directions. A loan or card EMI paid on time can help your score over time. A missed EMI, or a high balance relative to your card limit, can pull it down and make your next home or car loan more expensive. Several loan enquiries in a short time also count against you, so compare offers using soft checks or published rates before applying.

A simple decision rule

If you can pay for the trip from savings and still keep three months of expenses aside, pay upfront or use a no-cost EMI you've checked. If you can't, either save for six months, choose a shorter or nearer trip, or travel in the shoulder season. Our international tour packages include options at several price points.

Frequently asked questions

Is no-cost EMI really free for holiday packages?

Not entirely. The bank charges interest, and the seller offsets it with an upfront discount, but you still pay 18% GST on the interest component and usually a processing fee with GST. On a ₹1.2 lakh booking over six months, that typically adds about ₹1,000–1,500. Check that the price wasn't raised to fund the discount.

What interest rate do travel loans charge?

At the time of review, personal or travel loans from banks and NBFCs typically charge about 11–24% a year, depending on your credit score, income and lender, plus a processing fee of 1–3% with GST. Credit card EMI conversions usually cost 13–24% a year plus 18% GST on interest. A loan against a fixed deposit is usually cheaper.

Does TCS apply if I pay for an overseas package by EMI?

Yes. The Indian operator collects 2% TCS on an overseas tour package from the first rupee, however you pay, and usually at the time of booking. EMI doesn't spread or reduce it. The TCS is credited to your PAN and adjusted against your income tax when you file your return, so it isn't a cost, but it is money locked up.

What happens to my EMI if I cancel the trip?

The loan or EMI continues. Any refund from the operator follows its cancellation terms and goes back to your card or account, but you still owe the remaining EMIs, and interest already charged isn't returned. Trip cancellation cover in travel insurance can reimburse non-refundable costs for covered reasons such as serious illness, not for a change of plans.

Is a personal loan or credit card EMI better for a holiday?

It depends on the rates you're offered. With a strong credit score, a personal loan at 11–13% can be cheaper than a card EMI, but it often carries a larger processing fee. A card EMI is quicker for smaller amounts. Compare the total cost, including fees and GST on interest, rather than the headline rate.

How we checked this page

Last reviewed 28 October 2026

Written and fact-checked by the Elitech Travels editorial desk in New Delhi, drawing on our consultants' day-to-day booking work and the official sources below. Rules, fares and fees change — always confirm anything critical with the issuing authority before you travel. Our editorial policy.