Travel Consortium: How to choose the best in 2021
The dream of taking a vacation with the family or traveling to a different place does not always come true because of the tight budget. If that’s your case, this article is for you. Today we are going to deal with the travel consortium.
Although most people associate the consortium with the purchase of goods, such as cars or real estate, the fact is that there is also a consortium of services and, among them, is what allows you to use credit to pay for a trip. In this article we will show how this is possible.
First, the most important
- The travel consortium allows you to organize financially.
- Without interest, the travel consortium works as a kind of savings.
- But attention is needed to choose the best insurer and the value of installments.
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Hiring Guide: What you need to know about the travel consortium
Traveling on vacation is the wish of almost. But the fact is, nowadays, a trip doesn’t come cheap. After all, it is necessary to consider the price of tickets or gasoline, accommodation, tours and food.
Due to the high prices, many people end up giving up traveling. Also, paying cash is for a few. Installment and financing often means paying high interest rates. But not everything is lost.
The travel consortium is an alternative that can help you realize the dream of that special trip. And that’s what we’re going to talk about in this Hiring Guide.
What is the travel consortium and how does it work?
The travel consortium works in the same way as other types of consortia. You need to contact an authorized administrator and choose one of the groups formed by people who have the same interest as yours.
In the case of the travel consortium, the groups are formed, primarily, according to the total price of the trip.
However, some administrators also have groups formed according to the destination of the trip, whether city or in another country.
In one way or another, it is ideal that the destination of the trip is defined by you before you even join the travel consortium. Only then will you be able to plan and know in advance how much your trip will cost.
Having defined the group and the amount of the letter of credit, which is the total amount you expect to receive to pay for your trip, each month each member of the group contributed with a benefit.
There are also monthly draws in which one or more people are awarded the letter of credit.
Who is the travel consortium recommended for?
The travel consortium is the best option for those who have difficulty planning financially or for those who do not have the habit of collecting money.
After all, it is necessary to carry out a planning to be able to pay for tickets, accommodation and sightseeing tours.
According to the Association of Consortium Administrators (Abac), the travel consortium is ideal for those who plan trips at least one year in advance.
This is the case, for example, of those who intend to do an exchange in another country, travel on vacation with family or even celebrate special dates, such as birthdays, graduations and weddings on a trip ( 1 ) .
Did you know that the travel consortium is part of a category called Service Consortium?
The service consortium has been in existence for 10 years and is used to pay for services such as: hydraulics, electricity, decoration, repair surgeries, dental services, graduation parties, undergraduate and MBA courses, general repairs and etc.
Between January and April 2019, the services consortium included 9.25 thousand participants, with R $ 51.39 million, an increase of 65.8% compared to the same period last year ( 2 ) .
What are the travel consortium fees?
As with other types of consortia, the travel consortium is also exempt from interest rates. That is, the installments you pay monthly are not subject to interest.
As a result, the consortium does in fact take the lead in other forms of payments such as, for example, loans and financing, which may include very high interest rates.
However, the travel consortium benefits have a built-in fee, known as a fee for the administrator. And the fact is that this fee can greatly increase the final amount that you will pay to the consortium administrator.
In addition, there are also annual adjustments that vary according to indices such as the National Consumer Price Index (INPC). So, be aware of these fees before closing the contract.
How to use the consortium credit for travel?
When a participant in the travel consortium group is drawn, he needs to contact a travel agency and carry out the purchase process such as choosing the destination, accommodation and conditions of the trip.
It is the administrator who will pay the amount directly to the agency.
Once this is done, the consortium winner must inform the administrator. This is because, it is the administrator who will pay the amount directly to the travel agency.
That is, you will not have access to money from the letter of credit. Still, it is possible to receive the money from the travel consortium on hand. However, in this case, you will need to wait approximately 180 days.
If the travel package you choose is cheaper than the letter of credit, you can use the difference to pay off the remaining installments of the travel consortium.
On the other hand, if the trip you plan to take is more expensive than the amount you got from the consortium, you will have to pay the difference out of your own pocket.
What are the advantages and disadvantages of the travel consortium?
There are many advantages to hiring a travel consortium. For a start, when you join a group, you end up creating savings.
In addition, in a travel consortium, the installments have no interest. And, while you are not contemplated, it is possible to plan your trip calmly.
When contemplated, even if you need to continue paying the consortium’s installments until the end of the established schedule, you will be able to pay for the cash trip, which will probably yield you good discounts.
But it is also necessary to mention the negative points of a travel consortium. The main thing is that, despite having no interest, the installments have an administration fee and annual adjustment. And that can increase your spending.
Another disadvantage is that the consortium is not for those who want to take a trip in the short term. After all, it is not possible to specify when you will be awarded the letter of credit.
That said, check out the table below that summarizes the main advantages and disadvantages of the travel consortium.
How to participate in the travel consortium?
To participate in a travel consortium, the first step is to look for an administrator, since it is she who brings together those interested in the same letter of credit.
To be sure of the company’s suitability, know that, first, it needs to be authorized by the Central Bank. On the Central Bank website, you can find the list of authorized companies and those that receive more complaints ( 3 ) .
Hiring Criteria: How to analyze the travel consortium
As there are different travel consortium groups, it is important that you know how to identify the best one according to your needs and expectations.
For this, our recommendation is that you check the following topics before closing the contract. Look:
- Term of use
Below we will explain to you how to analyze these criteria.
Before purchasing a quota, you need to define how much your trip is and, of course, how much you can pay per month.
With this, you will be able to choose the group that has the ideal letter of credit and also the ideal installments to be paid monthly.
Experts recommend that the amount of the installment should not compromise more than 30% of your income.
Therefore, research the price of the trip before closing the consortium, and consider the amount you will spend on accommodation, tours, car rental and emergency expenses.
Also note the term of the travel consortium group. In general, in a travel consortium, the term is 1 to 4 years.
And this period has a direct impact on the date of your trip and also on the number of installments you will pay.
It is also worth mentioning that the longer the consortium term, the higher the percentage charged for the management fee.
Another factor that you should check is how the letter of credit is contemplated. In most travel consortia, this happens with monthly drawings. But it can also occur through bidding.
The bid is an alternative for those who do not want to wait so long to make the trip. In this case, the participant makes a bid and can get the letter of credit beforehand.
Term of use
Be sure to also consider the time you will have to use the letter of credit after being considered in the travel consortium. This can vary from one company to another.
But, in general, after being drawn, you can use the amount to pay for your trip in up to six months. To avoid problems, carefully read the contract specifications.
The travel consortium is a way of saving to pay for the long-awaited trip. For this, you pay installments every month and expect to be drawn to use the letter of credit and pay for the trip. But it is also possible to bid and advance contemplation.
Therefore, the consortium is indicated so that it is in no hurry and can wait to make the trip. In addition, attention is needed to choose a portion that fits your budget and a company that is authorized by the Central Bank.