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personal loan

Generally, when it comes to personal loan, the first thought that comes to our mind is that people might be taking it either for a luxurious holiday or to buy an expensive gadget. But the ground reality is quite different from our thinking and a bit worrying. More than fulfilling their hobbies, people in the country are resorting to loans to meet their compulsions, especially medical emergencies. The data revealed in Paisabazaar's recent consumer research report, 'The Personal Loan Story', presents a new picture of the financial challenges of Indian families.

Having to take loan due to lack of health insurance

This survey has shockingly revealed that the biggest reason for taking a personal loan in India is medical emergency. According to the report, about 11% people take loans from banks or financial institutions to meet illness and hospital expenses. This figure is a direct indication that treatment in the country is becoming expensive and people do not have adequate health insurance coverage.

This problem is even more serious in the big cities of the country i.e. Tier-1 cities like Delhi, Mumbai, Bengaluru and Hyderabad. In these metros, the number of people taking loans for medical emergencies has reached 14%. In comparison, this figure is 10% in smaller cities (Tier-2) and 8% in Tier-3 cities.

Expenses taken for repairing the house also

Not only illness, but also the maintenance of a roof over the head and maintenance of the house is a major reason for taking a loan. The report shows that almost half i.e. 48% of the people opt for personal loan to meet their household needs or for unexpected home repairs.

Apart from this, there is a large section of people who are taking loans to upgrade their lifestyle. About 36% people take loans to improve their lifestyle and fulfill their desires. At the same time, there are 16% people who take help of personal loan to expand their business or for related needs.

Changing mood of middle class

This research is based on conversations with 2,889 people in 23 cities and towns of the country, due to which huge differences have been seen in the behavior of different areas. People of Tier-3 i.e. small towns are more dependent on personal loans to meet their daily needs. According to the data, residents of Tier-3 cities are 2.4 times more likely to take loans for daily expenses compared to Tier-1 cities.

On the other hand, the story of the middle class is a little different. People whose annual income is between Rs 7.5 lakh to Rs 10 lakh are most eager to fulfill their suppressed desires. 40% people of this income group are taking loans to spend on things related to their lifestyle. Santosh Aggarwal, CEO of Paisabazaar, believes that now people are not taking loans just by looking at the interest rates, but their needs and important stages of life are influencing their decisions more.