How Indian Millennials Can Navigate Personal Loans

Kalpana Pandey, CRIF High Mark Managing Director & CEO, gives insight into the young generation of Indians and their loan decisions.

The Indian millennial group comprises 400 million people in the age range of 18-36 years (median age 29-32 years) with the purchasing power of approximately $330 billion. The demand for unsecured loans (personal loans, consumer durable loans, credit cards) is on the rise especially since the approval decision is almost instant and there is no need for any collateral. One can easily take a personal loan from a bank, NBFC or an online lender. Recent reports show that 44% of personal loans were disbursed in FY19 to people in the 26-35 age group, and 13% to those who were 25 or below. The number of personal loans disbursed grew at 25% compounded annual growth rate (CAGR). Many first timers also find it easier to get a consumer durable or personal loan – nearly 46% of the loans in 2018 went to new-to-credit consumers. These numbers clearly state that personal loans are one of the most sought-after products not only for banks and new-age lenders, but also for millennials.

Millennials making smart choices: Personal loans help millennials meet any shortfall they experience whether it is a purchase of big-ticket items such as cars, expensive vacations, higher education, medical contingencies or peer pressure needs like smartphones. Millennials are also increasingly opting for zero cost (EMIs) for their purchases. Ultra-short-term loans—with a tenure of a few weeks—are also easily available.

Using technology for loan decisions: A prominent trait of millennials is that they are tech-savvy and constantly connected. Their digital footprint reveals that they prefer to communicate via digital avenues. Digital lending firms have changed the dynamics of personal finance space enabling new-to-credit salaried individuals to borrow more. The evolving peer-to-peer lending platforms are also trying to gain a fair share of the pie. Millennials are using online platforms and tools like the personal loan EMI calculator to explore the right schemes, find out interest payout over the loan tenure and evaluate repayment capacity before taking a call.

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