Paying for a holiday in smaller pieces is becoming a common choice for UAE residents. Travel and finance experts say that, before signing up, buyers should look beyond the size of the monthly payment.
Experts in the travel and tourism sectors have warned against treating offers marketed as zero interest as cost-free. They note a growing number of travel instalment products in the local market, similar to those in other retail sectors.
A widening menu of options
The choices now range from short splits to long loans. Options run from four-payment splits to 48-month bank plans. That range means two plans with the same headline monthly amount can have very different total costs.
Bader Ahli, CEO of Dubai World Travel, said instalment plans for travel bookings are gaining popularity in the local market. The appeal is easy to understand. A family trip can cost several thousand dirhams, and spreading the cost can make a booking feasible during peak season.
‘Interest-free’ is not always cost-free
The strongest caution came from a banking expert. Amjad Nasr said instalment offers marketed as having no interest or extra fees are not necessarily without economic cost. He advised consumers to look at the actual cost and their future obligations, not the phrase ‘interest-free’ alone.
Where a promotional plan carries no interest or fees, he said, the total cost still depends on the interest rate, how it is calculated, the repayment period and any additional fees. In practice, a plan can be free of interest but still include a processing charge, a fee for early settlement, or a higher price compared with paying in full.
The costs people forget
The report highlights three areas where buyers are most likely to be caught out. Experts said the total cost, cancellation conditions and rescheduling fees matter more than the monthly payment figure.
Cancellation is the biggest risk. A trip may be cancelled, delayed or changed, which is a real consideration in a period when some regional flights have been disrupted. If the airline or hotel refunds money, the instalment provider may still expect payments to continue until the process is settled. If a booking is non-refundable, the buyer may be repaying a trip they never took.
Rescheduling can add costs of its own. Some travel products charge a fee to change dates, and an instalment provider may charge a separate fee for altering the plan.
Questions to ask before you sign
Consumer advice in the UAE follows a consistent pattern. Before accepting any instalment plan for travel, buyers can ask the following:
- What is the total amount I will pay across the whole plan, compared with the cash price?
- Are there processing, administration or early-settlement fees?
- What happens to my instalments if the flight is cancelled or I need to change dates?
- What are the penalties for a late or missed payment?
- Will this affect my credit record or my credit card limit?
Written answers are better than verbal ones, and the key terms should appear in the contract, not just in the advertisement.
Budget for the whole commitment
Instalments also add up. Someone who takes three or four plans at once, for travel, electronics and furniture, may find a large portion of future salary already committed. Financial planners generally recommend making sure that the monthly total of all instalments stays within a comfortable share of income, with a cushion for emergencies.
The takeaway from the experts is not that instalments are bad. For many households they are a useful way to manage cash flow. The takeaway is to compare the full cost, understand what happens if plans change, and treat ‘zero interest’ as a starting point for questions rather than the end of them.
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