Two out of three Indians are open to taking loans, a new survey by consumer finance provider Home Credit India has revealed.
Interestingly, fulfilling family needs and their wishes constitute the single top-most reason for people wanting to take a new loan, reveals the report, which has released a new perspective on India’s borrowing habits.
The second reason why most Indians take a loan is to upgrade their lifestyle. The survey, commissioned across 12 cities and 2,571 respondents, also revealed that 33 per cent of Indians are willing to take a loan for a consumer durable item such as mobile phone, television, and refrigerator, among others. The other vastly popular loan categories are: two-wheelers (23.3 per cent) and personal expenses (20.3 per cent). This is followed by purchase of cars (12.5 per cent), house (12 per cent), and gold (10.5 per cent).
“In recent years, there has been a shift in the behaviour and approach of Indians to taking loans. Nearly 67 per cent are now open to taking loans,” Marko Carevic, Chief Marketing Officer, Home Credit India, told BusinessLinehere.
“This survey is yet another attempt to understand our customers, so that we can customise our product offerings to the need.”
For nearly 46 per cent of Indians, the desire to fulfil the needs and wishes of the family tops the list of reasons for taking a loan. Family-orientation and need are highest among people in Patna (61 per cent), followed by Lucknow (58 per cent), Nagpur (56 per cent), and Jaipur (54 per cent).
Mumbai tops in people taking advice from friends (65.1 per cent), Lucknow tops in advice from family (72.2 per cent), and Chandigarh tops in advice from colleagues (54.9 per cent). People in Mumbai and Delhi are the most evolved in terms of consulting a financial advisor before taking a loan at 44.2 per cent and 38.8 per cent, respectively.
While a major part of the population is open to taking loans, there is a substantial group that is loan-averse, according to the survey commissioned by Home Credit India and conducted by research agency Absolutdata.
The lack of procedural (paperwork) information and payment options is a major reason why people are loan-averse. Tier 2 towns still rely on personal experiences against professional advice for seeking a loan.
Family and friends
Friends and family not only feature at the top of the survey for fulfilling needs, but they also play the most important role in the decision-making process of the loan. Thirty four per cent of Indians rely on friends for advice while taking loans, followed by family at 31.8 per cent and colleagues at 25.4 per cent.
A financial advisor comes second at 22.4 per cent as the source of advice, followed by sales representative of a loan provider at 21.8 per cent. About 20.9 per cent people take a self-decision while availing a loan and do not consult anyone.