Indian consumer vs Loans

Kashif Azeem 16 March 2025

Indian consumer behavior toward loans is shaped by several factors, including economic conditions, cultural attitudes, financial literacy, and regulatory policies.

Fintellimart guides you to the changing consumer behaviour and market adaptation.

Here are some key insights:

1. Preference for Borrowing

Traditionally, Indians were cautious about taking loans and relied on savings.
However, with changing lifestyles and economic growth, borrowing has become more acceptable.
Younger consumers, especially millennials and Gen Z, are more comfortable taking loans for lifestyle needs (e.g., travel, gadgets).

2. Popular Loan Types

Home Loans: High demand due to urbanization and government subsidies like PMAY.
Personal Loans: Increasingly popular for emergencies, weddings, and discretionary spending.
Vehicle Loans: Common for car and two-wheeler purchases, often influenced by easy financing options.
Education Loans: Growing acceptance due to rising higher education costs.
Buy Now, Pay Later (BNPL): Rapidly growing among online shoppers.

3. Digital Adoption

Fintech apps and digital lending platforms are making loans more accessible.
Instant loans through mobile apps are popular due to minimal paperwork.
UPI-based credit models are emerging as an alternative to traditional loans.

4. Factors Influencing Loan Decisions

Interest Rates & EMI Affordability: Most Indians prefer lower EMIs over a shorter loan tenure.
Reputation of Lender: Trust in banks and NBFCs plays a significant role.
Processing Time: Quick approvals are preferred, especially for personal and emergency loans.
Credit Score Awareness: Awareness is rising, but many consumers still lack knowledge of its impact.

5. Urban vs. Rural Borrowing

Urban Consumers: More inclined toward digital loans and credit cards.
Rural Consumers: Prefer microfinance, gold loans, and traditional banking channels.