Are personal loans growing in India?

Within the past few years, the demand for personal loans has increased. The reason behind this is the growing needs of people, causing a rise in their expenses. Especially after the pandemic, the number of people taking personal loans has grown immensely. As the pandemic left a lot of people jobless, it led them to have no income and high expenses.

Apart from this, the online availability of instant personal loans has also increased the demand for personal loans. One of the key factors of the increase in demand for personal loans is because of its easy and instant online availability.

Factors indicating the growth in Personal Loans in India

• Lately, there has been a drastic growth in unsecured lending in India. Gen Z has played a vital role in this growth.
• The major reason behind the growth of personal loans is that Non-Banking Financial Companies (NBFCs) like LazyPay provide loans to people more easily and affordably without having to go through any long documentation process.
• The moratorium period provided by the banks has also made it convenient for people to take a loan. As it offers the relaxation to pay EMIs after a break, it has become way easier for people to take a personal loan.
• Short-term financing systems like Buy Now Pay Later (BNPL) have also played their part in the growth of personal loans in India. It provides financial assistance to people without having much to do. BNPL offers instant personal loans to people just at their fingertips.

The reason behind the growth of Personal Loans in India

1- Easy Accessibility

After digitisation, it has become very uncomplicated to have access to a personal loan. The digital process has provided users with the convenience of accessing a personal loan without going through a long and troublesome process.

2- Hassle-free Application Process

Unlike the old times, the process of getting a personal loan approved has become smooth and hassle-free. These days, you need not go through a long and fussy paperwork or documentation process. In fact, you don't even have to visit a bank for it.

3- No obligation on Usage

Various loans come up with a rulebook stating a particular use of the loan amount, such as home loans, etc. Unlike these loans, a personal loan does not restrict you from using the loan amount for a particular reason. You can freely use the personal loan amount to fulfil any of your financial needs, like getting your house renovated or having a destination wedding, etc.

4- Availability of Collateral-free Loans

There are two types of personal loans- secured and unsecured. While a secured personal loan demands some kind of security from you, an unsecured loan does not require any collateral or cash asset in the form of security. This factor makes it more trouble-free for customers to seek a personal loan.

5- Flexible Repayment Tenure

The typical repayment tenure for the instant personal loan is 12-60 months. You can choose a repayment tenure according to your convenience. Although, you will have to be very cautious about it because if you choose the long-term, you will have to pay a slightly higher interest rate.

6- Easy Eligibility Criteria

While the eligibility criteria for taking a personal loan differs in several banks, the NBFCs providing online instant personal loans have a certain eligibility criterion. This eligibility criterion is way too easy to meet, and this makes the process of taking an instant personal loan a lot more worry-free.

7- Needs a few pieces of documentation

If you visit any bank to get a personal loan, you are not going to get it instantly. Plus, you have to go through a fussy documentation process. Unlike that, taking an online instant personal loan, you will only need a few important documents, and That's it! You are done.

Personal loans are growing in India, undoubtedly. And the reason behind this is growth in expenses, appealing interest rates, easy availability of personal loans, etc. However, the most important factor that plays an important role in the growth of personal loans in India is its collateral-free nature. As an unsecured personal loan does not require any sort of collateral, a large number of customers find it easier to take a loan.