67% of Indians ready to take out loans: Home Credit survey

Two out of three Indians are ready to take out loans, a new survey by consumer credit provider Home Credit India has revealed.

Interestingly, meeting family needs and wishes is the main reason people want to take out a new loan, reveals the report, which released a new perspective on India’s borrowing habits.

The second reason why most Indians take out a loan is to improve their lifestyle. The survey, commissioned in 12 cities and from 2,571 respondents, also revealed that 33% of Indians are willing to take out a loan for a durable consumer item such as a mobile phone, television and refrigerator, among others. Other very popular loan categories are: two-wheelers (23.3%) and personal expenses (20.3%). Next come the purchases of cars (12.5%), houses (12%) and gold (10.5%).

“In recent years, there has been a change in the behavior and approach of Indians to loans. Almost 67% are now ready to take out loans,” said Marko Carevic, Marketing Manager, Home Credit India.
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“This survey is another attempt to understand our customers, so that we can tailor our product offerings as needed.”

For almost 46% of Indians, the desire to meet the needs and wishes of the family tops the list of reasons for taking out a loan. Family orientation and needs are highest among residents of Patna (61%), followed by Lucknow (58%), Nagpur (56%) and Jaipur (54%).

Mumbai tops the number of people taking advice from friends (65.1%), Lucknow tops advice from family (72.2%) and Chandigarh tops advice from colleagues (54.9%). People in Mumbai and Delhi are the most advanced in terms of consulting a financial adviser before taking out a loan at 44.2% and 38.8%, respectively.

While a large part of the population is willing to take out loans, there is a significant group that is opposed to loans, according to the survey commissioned by Home Credit India and conducted by research agency Absolutdata.

Lack of procedural information (documents) and payment options is one of the main reasons why people oppose loans. Tier 2 cities always rely on personal experiences versus professional advice when applying for a loan.

Family and friends

Friends and family are not only at the top of the survey for meeting needs, but they also play the most important role in the loan decision-making process. Thirty-four percent of Indians rely on friends for advice when taking out loans, followed by family at 31.8 percent and colleagues at 25.4 percent.

A financial adviser comes second with 22.4% as a source of advice, followed by a sales representative from a loan provider with 21.8%. About 20.9% of people make a personal decision while availing a loan and do not consult anyone.