India’s consumer habits are undergoing a massive transformation. The trend of taking loans to buy consumer durables such as smartphones, TVs, and other electronic appliances has skyrocketed, reflecting a shift in how people manage their finances and make purchasing decisions. Not only are loans being taken for gadgets and home upgrades, but the preference for loans to fund weddings and business expansion has also seen a sharp rise in recent years.
Major Rise in Loans for Smartphones and Electronics
According to a recent report from Home Credit India titled “How India Borrows,” the number of people taking loans for smartphones and home appliances has increased by 37 times between 2020 and 2024. While only 1% of such loans were taken in 2020, this figure has surged to 37% in 2024. The COVID-19 pandemic seems to have played a crucial role in this shift, encouraging consumers to prioritize lifestyle upgrades, especially as work-from-home and digital connectivity became more important.
Indians are now embracing the idea of taking loans to immediately buy items like smartphones, TVs, washing machines, and refrigerators, without much hesitation. Consumers are more willing to enhance their homes and lifestyles by financing these purchases rather than saving up over time.
Strong Desire for Lifestyle Improvement and Business Expansion
The report highlights that the drive to upgrade home and lifestyle has become a major reason for people taking out loans. While most of these loans are for consumer durables, there has been a noticeable increase in loans for business purposes. In 2020, only 5% of loans were taken for business expansion, but this number has jumped to 21% in 2024.
The entrepreneurial spirit is growing, fueled by the government’s support for MSMEs (Micro, Small, and Medium Enterprises), creating a conducive environment for business growth. People are eager to take advantage of new opportunities to increase their income streams and contribute to the country’s economic progress.
Marriage Loans Surpassing Education Loans
Interestingly, loans for weddings are becoming more popular than education loans. Between 2020 and 2024, loans taken for marriage have increased from 3% to 5%, while the percentage of loans for education has remained steady at 4%. The desire to fund lavish wedding celebrations seems to have surpassed the need for financing higher education, reflecting a cultural shift in priorities.
Home Improvement and Medical Loans: Changing Trends
Home improvement loans have also seen a notable rise. The number of people opting for loans to give their homes a fresh look has grown from 9% in 2022 to 15% in 2024. Meanwhile, the need for loans for medical emergencies has dropped from 7% to 3% during the same period. Improved financial planning and better access to healthcare facilities are thought to be the reasons behind this decline.
Banking and Online Shopping via Apps on the Rise
As digital technology becomes more accessible, consumers are increasingly using apps for banking and shopping. The survey, which was conducted across 17 cities in India, including the top 7 metros, found that people are more comfortable using apps for online purchases and managing their finances.
With around 2,500 respondents aged 18-55 years, and an average monthly income of Rs 31,000, the survey also indicated that EMI cards remain highly popular for funding larger purchases.
