Leave aside slowdown, Indians still want loans: Survey

Representative image

Amid fears of a slowdown across the corporate sector, Indians still want loans for lifestyle-related purchases. A survey by consumer finance firm Home Credit India showed that 67 percent would take a loan to purchase an item.

This study conducted by research agency Absolutdata has been commissioned across 12 cities and 2,571 respondents have been evaluated to provide a near to accurate pattern of savings, spending and borrowing behaviour in the country.

The survey said that the desire to fulfil the needs and the wishes of the family tops the reasons for taking a loan in the future. While lifestyle is important, respondents have revealed that fulfilling family needs and their wishes constitute the single topmost reason for people wanting to take a new loan.

The second reason why most Indians are willing to take a loan is to upgrade their lifestyle. The survey revealed that 33 percent 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 the two wheelers (23.3 percent) and personal expenses (20.3 percent).

This is followed by is for purchase of cars (12.5 percent), house (12 percent) and gold (10.5 percent). When asked about the future, 33 percent of the respondents are likely to take it for consumer durables while personal loans are the next high interest segment at 28 percent followed by two wheelers at 22.8 percent.

Agriculture loans (0.7 percent), credit card EMI (1.1 percent), travel loans (1.5 percent) and medical loans (3.7 percent) are the lowest ranked categories of loans.

About 33 percent Indians believe that loans are important to enhance their lifestyle highest being in cities like Mumbai (49 percent), Jaipur (47 percent) and Chandigarh (41 percent).

On the converse, lifestyle consideration is the least among people in Ahmedabad (19 percent) followed by Indore (19 percent), Bangalore (20 percent) and Kolkata (20 percent).

Friends and family not only feature at the top of the survey for fulfilling needs, they also play the most important role in the decision-making process of the loan.

About 34 percent Indians rely on friends for advice while taking loans followed by family at 31.8 percent and colleagues at 25.4 percent.

A financial advisor comes second at 22.4 percent as the source of advice.

While the country is very positive towards loans, a section of the respondents have also not been positively drawn towards the concept of lending and borrowing and therefore have never taken a loan before. The study showed that 35 percent of the respondents say that having a loan is a stressful feeling. The second reason for loan aversion is that 32 percent of respondents believe in saving and spending.

The fear of not being able to repay is the third reason why people do not take loans.

Marko Carevic, Chief Marketing & Customer Experience Officer, Home Credit India, “After China and Russia, India is now showing signs of a new resurgence and we have seen the evolution of the customers since our entry in 2012. The survey is yet another attempt to understand our customers so that we can customise our product offering to the need.”

It is to be noted that both banks and NBFCs are seeing a slowdown in the disbursement of credit especially for categories like consumer durables.