In India, 11% of personal loan borrowers are forced to take loans due to medical emergencies and treatment-related expenses. According to a recent report ‘The Personal Loan Story’, this figure reaches 14% in Tier-1 cities, while 10% in Tier-2 cities and 8% in Tier-3 cities took personal loans for health-related needs. These figures clearly indicate low penetration of health insurance and rapidly rising medical costs in the country.
Main reasons for taking personal loan
According to this report by Paisabazaar, the study is based on in-depth interviews of 2,889 personal loan borrowers across 23 cities and towns. It contains detailed information on important aspects like reasons for taking loan, decision process, priorities and credit awareness. Borrowers have also cited daily essential expenses, unexpected home repairs, functions like weddings and other immediate needs as the main reasons for taking a personal loan.
Some main findings of the report
48% borrowers took loans for essential expenses.
36% to fulfill their aspirations.
16% for business or investment.
Personal loan also for lifestyle expenses
The probability of taking a loan for everyday needs in Tier-3 cities is 2.4 times higher than in Tier-1 cities. Apart from self-employed people, 9% of employed people are also taking personal loans for family business, side business or passion projects. The middle class with an annual income of Rs 7.5 to 10 lakh has the highest rate of taking loans for lifestyle expenses (40%). 11% of borrowers took loans for weddings and other functions, with 14% in tier-1 cities.
Online vs Offline Personal Loan
There is still more trust in offline. Despite increasing availability of online loan platforms, only 32% people took personal loans through online medium. Most borrowers still depend on offline channels. Another thing that also came to light was that 25% of the borrowers took the loan without examining any other option. Especially in Gen Z, this figure reached 31%.
Latest Business News