India, being the second-most populated country in the world with such a diverse culture and traditions, the expenses of each household are somewhat still the same. Expenses can come at any time and place. Most working people opt for personal loans for reasons like medical emergencies, school and college fees, home renovation, and weddings.
NIRA a consumer finance company, found out about this information via a survey they conducted as ‘Understanding the Financial Challenges of Working India’, in which stated that 28% of personal loans were taken for medical emergencies, whereas 25% for family needs such as children’s education, home renovation, and wedding expenses.
The report inferred that even though they earn modest salaries, those are just about enough to cover their daily expenses and leave no surplus funds to save for the future or any contingencies. Hence, as high as 77 % of individuals have relied on unsecured personal loans to make ends meet.
The report also stated that 41% named interest rate as the main criteria for choosing a lender, whereas 30 % named loan tenures and 20 % disbursal time as their main criteria.
Rohit Sen, CEO, and Co-Founder, NIRA, said that the young working Indians shoulder a lot of responsibility, and they work hard to make ends meet but struggle to cope when faced with unanticipated or larger-than-usual costs. Since they’re unable to borrow from banks, they turn to local moneylenders who usually charge them more than 100 percent interest, further exacerbating their financial difficulties.
Some Important Observations of the Survey:
· 87% managed their finances right from tax returns and EMIs, 55% depended on family and close friends and 25% looked to social media for solutions and only 5% went to a Chartered Accountant for documentation help
· Most of the participants had their savings in traditional products like a savings account, cash, fixed deposits, and as good as 40% preferred gold as a form of investment even though it does not give much return on investment. Only 12% of them invested in mutual funds or stocks.
· Average breakup of an individuals’ monthly income: 60% went to their families, 20 % to rent, 8 percent to the daily commute, and 12 % to savings which is very less to invest in retirement funds or long-term investments.
· Most of them are tech-savvy when it comes to transactions: 80 percent preferred net banking and 66 percent were using UPI to send or receive money. Only 7 percent still used cash or cheques.
· 35% of the participants wanted to know how to improve their credit score and 20% of them wanted to know how they can pay off their loans at a faster rate.
Follow and connect with us on Facebook, LinkedIn & Twitter
