youngsters in India tend to take personal loans more than older generations. This is due to a number of factors, including,
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| Personal loan risk |
Youth Seeking Personal Loans
The study revealed that Indians are applying for credit card facility and personal loan facility at an early age, with more than 50 percent applying for their first personal loan facility before the age of 30.
Financial services firm Baisabazaar conducted a nationwide survey on borrowing habits.
Many of the Indians in this study had three credit accounts in their late 20s. The average age of a first credit card user is 28.
The average age of first personal loan and consumer loan borrowers is 29. At the same time, the average age of home loan borrowers is 33.
Among first-time home loan borrowers, 45 percent have an average age of 30 to 40.Bengaluru ranks first among the healthiest cities in India in terms of credit. This credit health is determined on a credit score scale.
Increased access to credit, Youngsters today have more access to credit than ever before, thanks to the rise of digital lending platforms and fintech companies. These platforms offer quick and easy loans with minimal documentation requirements, making them attractive to young borrowers.
Changing attitudes towards credit, Young Indians are more comfortable with credit than their parents and grandparents. They see credit as a tool to improve their lifestyle and achieve their financial goals.
Rising aspirations, Young Indians have higher aspirations than their predecessors. They want to travel, buy a car or house, and start their own businesses. Personal loans can help them achieve these goals faster.
According to a report by TransUnion CIBIL, the credit information company, youngsters in the age group of 18-30 years accounted for 43% of all loan inquiries in the September quarter of 2023. This is a significant increase from 35% in the same quarter of 2021.
Personal loans are typically used for a variety of purposes, such as,
- Education expenses
- Wedding expenses
- Medical expenses
- Travel expenses
- Consumer durables
- Business startup costs
It is important to note that personal loans are unsecured loans, which means that they are not backed by any collateral. This makes them riskier for lenders, which is why they typically come with higher interest rates. Young borrowers should therefore carefully consider their financial situation before taking out a personal loan.
Here are some tips for young borrowers
Only borrow what you need and can afford to repay.
Compare loan offers from different lenders before choosing a loan.
Read the loan agreement carefully before signing it.
Make your loan payments on time and in full.
Avoid taking out multiple personal loans at the same time.
By following these tips, young borrowers can use personal loans to their advantage and achieve their financial goals.