A personal loan can help you tide over a variety of big-ticket expenses, along with providing funds for an emergency situation. Undoubtedly, these loans are most sought after. A Creditscape report issued by CRIF High Mark - a Credit Information Company (CIC) in India - has noted some distinct patterns in the personal loans being availed by individuals.

The CRIF report has revealed that despite a curtailment in the overall growth rate of personal loan - as compared to previous years - the average minimum amount of personal loans being availed has considerably increased. Further, the highest category of borrowers are between the age of 31 and 35. What’s more, there has been a significant growth in the personal loans disbursed to borrowers having annual income of less than Rs. 3 Lakhs. Here is a look at the key figures of the report along with what the market experts believe about the existing trends for consumption of personal loans.

CRIF report about small-ticket personal loans

As per the report, around 50% of the personal loans disbursed in the financial year 2020-21 (till August) were less than Rs. 5,000. Here’s a look at the comparative figures:

CRIF report about average age of borrowers

For the same time-period, around 51% borrowers were less than 35 years old. Here is a look at the comparative figures:

CRIF Report about annual income of borrowers

According to the report, 67% of the personal loans were disbursed -in the same time-period - to borrowers, whose annual income was less than Rs. 3 Lakhs. Here is a look at the comparative figures:

Opinion of industry experts on the prevailing trends

With the advent of the internet, you are just a few clicks away from receiving a personal loan. You can also check your EMI using the personal loan EMI calculator, as per your convenience. While experts do applaud the benefits and convenience of a personal loan, they are unanimous when it comes to making a checklist before availing a personal loan. After considering the prevailing trends experts suggest considering these key questions:

1. Is a personal loan my first or last option?

As per experts, you should never avail a personal loan as a measure of the last resort. If you avail a personal loan after exhausting all sources of income, then how will you pay your personal loan EMIs? Defaulting on your dues will worsen your financial situation. In the case of a financial emergency, you must review your investment portfolio, and liquidate the under-performing funds. You can consider selling your liquid investments. Experts say that using a personal loan for debt-consolidation, especially in the tough times of the pandemic, can further increase your financial woes. Rather, opt for a personal loan only when it’s your first choice, and you don’t have insufficient finances.

Can I repay what I am borrowing?

As per experts, the CRIF report has shown that low-income group borrowers are the highest borrowing group. A low income, however, can jeopardise your finances as you have to compulsorily make your personal loan EMI payments as per the schedule. Defaults would result in fines along with a sharp dip in your credit report. Experts advise keeping your personal loan EMIs to around 10% of your net monthly income. You must also keep in mind that personal loan interest rates are comparatively higher as compared to other loans, like home loans.

3. Am I borrowing for viable reasons?

According to the CRIF report, personal loans under Rs. 5,000 have considerably increased in the last three years. Considering this trend, market experts advise against taking a personal loan for small-ticket expenses. Taking several small personal loans for meeting short-term requirements without a corresponding growth in income can create a debt-trap.

Once you have a checklist in place, you can apply for a personal loan as per your individual requirement. But, always avail a personal loan from a reputed and trusted lending institution. You can rely on the personal loans, available on Bajaj Markets. These loans have a range of benefits, like minimum foreclosure charges, personalised pre-approved offers, flexible repayment tenures - ranging from 1 year to 5 years, and interest rates as low as 12%. Make an informed decision today to avail a personal loan on Bajaj Markets!