What are the main reasons Indians take personal loans?

Indians primarily take personal loans for medical emergencies, essential expenses, life events like weddings, and business needs.

How do credit scores affect personal loans in India?

While most Indians know about credit scores, only a small percentage fully understand their impact on loan approval and interest rates.

Which Indian cities see the most personal loans for medical emergencies?

Tier 1 cities in India show a higher proportion of personal loans being taken for medical emergencies compared to Tier 2 and Tier 3 cities.

Home / Business and Economy / Indians Borrow for Emergencies & Dreams

Indians Borrow for Emergencies & Dreams

23 Jan

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Summary

11% of loans fund medical emergencies, higher in Tier 1 cities.
Nearly half of borrowers use loans for essential expenses and home repairs.
Only 7% fully grasp how credit scores affect loan terms.

A recent study by Paisabazaar highlights key reasons why Indians take personal loans. Medical emergencies are a major concern, accounting for 11% of all loans, with this figure rising to 14% in Tier 1 cities. This points to challenges with healthcare costs and insurance coverage.

Beyond emergencies, nearly half of borrowers (48%) utilize personal loans for essential needs like household expenses and urgent home repairs. Aspirational spending and lifestyle upgrades also drive 36% of borrowing, while business needs account for 16%.

Furthermore, the research indicates a concerning lack of financial literacy regarding credit scores. Despite widespread familiarity, only 7% of respondents fully comprehend how credit scores influence loan approval and pricing. This suggests a significant knowledge gap that could lead to unfavorable borrowing conditions.