Introduction
In the last few years, there has been a rise in the sanctioning of personal loans in India. The easy availability of personal loans has made millennials opt for them. The financial preferences of Millennials are quite different from those of previous generations.
They prefer to spend money on travel plans, higher education, and even to fulfil goals through a personal loan. In this blog, we will study about Millennials borrowing. We will explore why Millennials prefer personal loans.
Who are Millennials?
People born between 1981 and 1996 are defined as Millennials. They define the huge population of India, and it is an active working population. They are changing the way people spend money. The older generation focused a lot on savings first and spending later. But Millennials prefer access over ownership and speed over tradition. These generations don’t spare from spending money to fulfil goals and experiences.
Why Millennials are Choosing Personal Loans?
There are a lot of reasons why Millennials prefer personal loans. Let’s understand them: –
1. Speed and Convenience
Millennials are a generation that is very time-conscious. They value time a lot and don’t want to wait in long queues. Neither do they want to submit a lot of documents for a personal loan application. Personal loans are easily available online now. Hence, they find it very convenient and quick for any urgent cash needs.
2. Focus on Experiences
Instead of spending money on buying material possessions, Millennials prefer to spend on experiences. This includes experiences like travel, fitness, and education. The new age fintech provides personal loans for this.
3. No Collateral Needed
The collateral-free feature is one of the most important reasons why Millennials prefer personal loans. To avail a personal loan, you don’t have to provide any security. Hence, you can easily avail a personal loan without worrying about collateral.
4. Digital Revolution
The digital revolution has totally changed how Indians engage with financial services today. There is an increase in smartphone usage, growing internet penetration, and the Government’s launch of the Digital India movement. This has given rise to digital lending.
Banks and NBFCs now have an app and website through which you can apply for a personal loan. The entire loan application will be completed digitally due to this. Hence, personal loans are becoming very popular among Millennials.
5. Shifting Consumer Behaviour
The economic development in India is changing the consumer aspirations, especially youth. Millennials are now willing to borrow money to upgrade their lifestyle. This generation prefers to buy products and pay for it later in EMIs. This has made personal loans popular among Millennials.
6. Freedom of Usage
One of the striking reasons for the increase in Millennials borrowing for personal loans is the freedom of usage. There is no restriction on the usage of money. You can use a personal loan for any purpose. Whether you have an emergency or want to fulfil your goal, you are free to use the funds as you want.
7. Avoiding Credit Card Debts
Millennials are very conscious about their money. They are very well aware that a credit card comes with revolving credit and has high charges for late payments. Whereas personal loans come with structured repayment and fixed tenure. Hence, they opt for personal loans and control their finances.
Where do Millennials Use Personal Loans?
Here are the common expenses where Millennials spend their personal loan funds: –
1. Travel and Experiences
Millennials enjoy travelling and exploring different locations. A personal loan helps them make this trip more affordable. They don’t have to affect their savings for traveling. They can easily take a personal loan to cover travel expenses. This will cover their expenses related to flights, accommodations, and activities.
2. Wedding Expenses
A wedding is an important event in anyone’s life. This grand celebration involves a lot of money. You will have to spend on clothes, venue, food, jewellery, etc. Millennials divide these expenses into EMIs through a personal loan. They get a personal loan to cover wedding expenses.
3. Upgrading Lifestyle
The new generation wants things up to date. They prefer to spend money on repairs and home renovations. They even opt for the latest smartphone or the newest version of a laptop. When the need arises, they even upgrade home appliances like a refrigerator, washing machine, or air conditioner. They fulfil these needs with the help of a personal loan. They feel paying in EMI for these expenses is a better option than spending their savings.
4. Learning and Upskilling
Millennials are constantly learning. They learn various skills for better employment opportunities. For this, they pursue online courses offered by Edtech platforms. They pay for these courses through Personal loans. Many edtech also have direct tie-ups with lenders, which makes the process quite simpler.
Conclusion
There has been an increase in the Millennials’ borrowing patterns. This has increased the popularity of personal loans among them. This generation prefers speed and convenience, and hence personal loans align with their expectations. Millennials prefer personal loans to meet urgent needs for education, travel, or medical expenses.
Contrary to traditional borrowing, personal loans offer flexible repayment plans and transparent terms. This appeals to the young generation, and hence they don’t mind borrowing to fulfil their dreams. Millennials want to achieve financial freedom, for which they choose a personal loan.