Home loans: A significant percentage of borrowers prefer the online mode to secure their loan: Survey

A significant percentage of millennial-led borrowers prefer the online mode to obtain loans over traditional offline channels, indicating an increase in digital penetration during the COVID-19 period, according to a survey.

After the second wave of the COVID-19 pandemic, shows a largely positive trend in consumer borrowing and, therefore, reflects a return to normal as consumer sentiments are positive and dynamic about the economic recovery, according to one annual “How India Borrows” (HIB) survey conducted by financial firm Home Credit India.

Almost 40% of borrowers have expressed their willingness to switch to digital platforms to take out loans. This is in addition to the 15% of customers who have already opted for online lending instead of traditional offline channels.

While technology has been a key enabler, survey results reveal that, like all digital trends, chatbot familiarity and trust is governed by age – with younger customers in the lead.

The HIB study was conducted in 9 cities including Delhi, Jaipur, Bangalore, Hyderabad, Bhopal, Mumbai, Kolkata, Patna and Ranchi. The main sample size was over 1,200 respondents (Home Credit clients) in the 21-45 age group, with an income of less than Rs 30,000 per month.

There was a sharp decline in borrowing for household current expenditure to 4% in 2021, or 85% last year, showing a shift from need-based borrowing to desire-based borrowing due to the recovery of the economy, says the investigation report.

There was a notable increase in borrowing for business creation or expansion accounting for 28%, followed by small loans or credits for the purchase of durable consumer goods to 26% of total borrowing. he declares.

Other positive reasons were home renovation / new construction (13%), medical emergencies (2%), car loan (9%), marriage (3%), education loan (2 %), investments and return from a previous loan, etc. (1 percent).

The survey identified a more than 50 percent increase in borrowing in 2020, however, borrowing to manage households declined, he said.

The pandemic has also led to the acceleration of digitization, as a growing number of borrowers show a preference for adopting an online lending pathway for future borrowing, thus boosting digital empowerment in financial services. , although the penetration of financial literacy is still ongoing, Home Credit India, Marketing Director Vivek Kumar Sinha said.

With many people experiencing job losses, pay cuts, this has resulted in an increased need for consumers to relaunch businesses this year.

At the regional level, survey results indicate that Bengaluru and Hyderabad have recovered more quickly from the pandemic, with 41% of respondents in Hyderabad having taken out loans for business revival and 42% of respondents in Bengaluru for purchases of durable consumer goods.

While states like Bihar and Jharkhand have the lowest internet population at 24% and 29% respectively, digital literacy in terms of cell phone use in Patna and Ranchi has been recorded at 64% and 65%. respectively, he said.

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