A new survey has been conducted by Saral Credit, a fin-tech platform that makes getting a personal loan easy and quick, to understand the key behavioral drivers which are driving the Personal Loan product in India. The Personal Loan product offers access to timely funds for an eligible individual to meet short-term fund requirements without inquiring into the end use of the loan proceeds. This survey conducted with 512 responds aims to provide insights into the factors that drive the growth of personal loans disbursals in India.
The survey results indicate that personal loans have witnessed a 46% growth in Originations (by value) from FY-2021 to FY-2022. According to the survey, 67% of respondents in India have taken a personal loan at some point in their lives to meet their fund requirements. The survey also revealed that 36% of respondents took a loan for home purchases or renovations, while 9% took personal loans for travel and vacation.
The interest rate remains the most critical factor for borrowers in choosing a loan provider, with 63% of respondents indicating that their decision to take a personal loan would be based on the charged interest rate. Additionally, 77% of respondents preferred to take personal loans from banks, while 14% preferred non-banking financial institutions.
Milind Satpute, Director of Saral Credit said, “The Personal Loans market in India is experiencing a red-hot growth rate, and yet, until now, little has been done to truly understand customer behavior in this segment, which banks and NBFCs have traditionally dominated. That's why the findings from the Personal Survey of 2023 are so important. This survey squarely addresses the key questions everyone in the industry should ask: Why do customers take personal loans? What are the most important factors they consider when choosing a loan? Which channels do they prefer? At Saral Credit, we believe that the answers to these questions are crucial to unlocking the full potential of the Personal Loans market, and we're excited to share the insights we've gained.”
The Personal Survey of 2023 sheds light on the increasing importance of creditworthiness in financial fitness, as individuals with a credit score regularly review their score and report. The survey also reveals that the majority of respondents are from the middle-class segment, with 91% of graduates and 78% of individuals earning above Rs 30,000.
Participation from both men and women is a good sign of inclusiveness and women's independence. While loan amount, repayment period, and convenience are essential factors for borrowers, 30% of respondents find the Personal Loans process time-consuming, and 20% find it complicated. Another 16% of respondents were unable to connect with the right provider.
According to the survey findings, the personal loans sector in India is experiencing significant growth, and borrowers are exhibiting a growing appreciation for the role of creditworthiness in obtaining such loans. Furthermore, the survey results indicate that the majority of respondents still prefer to get personal loans from banks, with the interest rate being the primary consideration in selecting a lender.
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