How does TNPL work?
Short for bare bones, TNPL is the travel version of the ‘Buy Now, Pay Later’ plan, in which you buy goods and pay through EMI, It is essentially a loan or credit that you are taking while booking or traveling and paying for the same.
Online travel aggregators or other travel firms either tie up with banks, fintech companies, loan apps and third-party lenders, or offer credit through their own fintech arms. You can directly approach the banks or third party lenders to avail this scheme. You can either pay partly or not at all at the time of booking and do so later in a specified period. You can avail or pay no-cost EMI interest The rate on the amount borrowed depends on the amount of funds and the period for which you are taking the loan.
options and limitations
Visually, TNPL appears to be a simple plan, but there is no resemblance to the options currently being offered to the customers. So whether it is the credit limit, interest rates, repayment tenure, beginning of the repayment date, or travel expenses for which the loan is being offered, you will get as many options as there are players in the market.
A loose rule is that you can avail no-cost EMI if you can pay the amount within six months, but for many players the tenure is even shorter, ranging from 1-3 months. This means that the window for repayment is shorter if you want to avoid paying any interest. After this period, you will have to pay interest which is generally between 1-2.5% per month or 12-30% per annum. The total repayment period is usually between 12-18 months. There is again a big change when it comes to starting EMIs, some players start the repayment period within a month of the booking date, while others allow you to complete your journey before starting the EMIs. Huh. There is also a penalty if you default on the EMI and it will affect your credit score as well.
The credit size being offered also varies, mostly depending on your income, credit score and repayment capacity. So, ZestMoney, which is available on travel platforms like MakeMyTrip, Yatra, EaseMyTrip, etc., has an upper credit limit of Rs 2 lakh with no-cost EMI available for a three-month repayment plan. Cash, on the other hand, gives loans from Rs 15,000-4 lakh, with a minimum income requirement of Rs 15,000-50,000 per month and loan repayment tenure of 3-18 months.
While the average transaction size for an international travel loan is Rs 1.5 lakh for SOTC travel, it is Rs 14,000-15,000 for domestic destinations for travel and Rs 65,000-70,000 for international travel. Bharat Malik, Senior Vice President, Flights, Yatra.com says, “The highest credit size demanded is Rs 14,300 for domestic flights and Rs 65,756 for international flights.” You can take loans for domestic and international packages, flights, hotels, sightseeing and other activities, but some players limit it to any of these options. Companies generally require you to undergo e-KYC along with proof of identity and address as well as credit score.
Should you choose it?
Is TNPL different from swiping a credit card or taking a personal loan? In case of credit cards, you get 30-45 days of free credit, which is slightly less than the nocost EMI window for TNPL. However, if you convert the credit card bill into EMI at 12-18%, it can be cheaper. Similarly, a personal loan may be less expensive if your bank offers a rate of less than 12%, which many people currently do. The repayment tenure is also longer in case of personal loan and the penalty for EMI default is less, making it a better option. TNPL plan is only appropriate if you can avail no-cost EMI scheme and repay within 1-6 months; If you are getting big discount from travel company or lender; If you need to travel in an emergency; Or there is a sudden lack of money. Since travel is a discretionary expense, it is better to save for the trip rather than pay interest on the travel cost.
Save Now, Pay Later
The Multiple app allows you to invest for short-term goals like travel, and offers discounts through brand tie-ups.
If, instead of paying later, you want to plan ahead for your trip, consider Multiple, the first app of its kind that has turned the ‘buy now, pay later’ concept on its head. has changed. the very first sightThis is no different from any other investment advice that helps you save for your goals like travel. However, it differs in two aspects. Firstly, this ‘save now, pay later’ option is specifically focused on financial planning for short term to very short term spending goals. Second, it sweetens the deal by tying up with various lifestyle brands and offering discounts of up to 5-10% on the amount invested, apart from any return on your investment.
“These discounts are exclusive in addition to any original offers from these companies,” says Paddy Raghavan, CEO and co-founder of Multiple. For travel, Multiple has tied up with MakeMyTrip, Yatra, EaseMyTrip, PickYourTrail, Beyonder among others. “If you show interest in a particular brand before you start investing, you can get additional benefits, such as an alpha of 2-3%. However, there is no compulsion to go with a particular brand on our platform, and you can easily withdraw the amount after the investment period,” says Raghavan.
So, if you want to save Rs 1 lakh for 10 months of travel, and decide to stick with MMT for booking your travels, you can start saving Rs 10,000 per month. Multiple will invest this amount in mutual funds, digital gold and P2P lending sites (with assured returns). At the end of 10 months, you can claim the return on investment along with the principal amount, along with the 10% discount currently offered by MMT. While travel is the more popular spending target, there are 15 other categories including insurance premium, wedding, home furnishing, buying jewelery or gadgets and more. Target terms are mainly less than one year, but can also be longer for essential expenses.