The Reserve Bank of India (RBI) has been hiking repo rates since February 2022. In fact, within a year, RBI increased the repo rate by 210 basis points, bringing it to 6.5% and impacting loan interest rates and making them dearer.
However, despite the rising rates, personal loans are on an uptrend. Here’s what RBI’s data shows –
| Period | Outstanding Personal Loans (Rs in lakh crores) |
| February 2019 | 21.63 |
| February 2020 | 26.86 |
| February 2021 | 29.63 |
| February 2022 | 33.33 |
| February 2023 | 40.13 |
Among other borrowers, millennials are driving up the demand for personal loans post the pandemic. As per a 2020 report published by CRIF Highmark, a credit rating bureau, millennials in the age bracket of 18-30 years are causing an uptrend in personal loans. The report also highlighted the 14% jump in the share of millennials in aggregate personal loan applications.
What makes millennials choose personal loans?
The reason is simple – the ease and speed of getting the loan.
Millennials are tech-savvy and look for a hassle-free solution for their financial needs. This is perhaps the reason why digital payments, e-commerce platforms, online investments, and even personal loan trends are booming. They know why and how to get a personal loan to fulfil their financial obligations.
Benefits of personal loans
Here are some reasons which make personal loans a hit with millennials –
- Multipurpose
Personal loans are multipurpose financial solutions that can be used to pay for –
– Weddings
– Travelling
– Making a down payment for a home
– Medical bills
– Emergencies
– Business expenses
There’s no restriction on the loan’s usage, making it a one-stop solution for multiple needs.
- Collateral-free
Personal loans are mostly unsecured, i.e. they do not require any collateral security. You don’t have to mortgage any asset (like gold, property, investments, etc.) to get the funds. This suits millennials who might not have sufficient assets at their disposal to fund the loan.
- Easy availability
The eligibility norms are relaxed, and the documentation is minimal. The online application process makes the loan process hassle-free and quick. Furthermore, there are different lenders offering the loan, making it easy for you to choose from a variety of options.
- Affordable
Being unsecured, personal loans tend to have a higher interest rate. However, with flexible repayment tenure options, it becomes affordable to pay off the loan. Moreover, if you compare and choose, you can get the most competitive interest rate in the market. This would bring down the EMIs (Equated Monthly Instalments) and bolster affordability.
For instance, IDFC FIRST Bank Personal Loans offer low interest rates starting from 10.49% p.a. only. You can get loans up to Rs 1 crore and repay over a tenure going up to 60 months for pocket-friendly repayments.
How to get a personal loan?
Getting a personal loan is easy, thanks to the online process. However, before opting for a loan, here are a few parameters to consider –
- Type of loan
Different types of personal loans are available in the market like –
– Travel loans
– Wedding loans
– Loans for salaried individuals
– Loans for self-employed individuals
– Pre-approved personal loans, etc.
Assess your requirement and then choose the right type.
- Eligibility criteria
Every lender prescribes personal loan eligibility criteria for a loan. Some of the common parameters include –
– Age – There is a minimum and maximum age limit within which you can apply for the loan. While the minimum age might start at 21 years, the maximum usually goes up to 65 years.
– Income – You need to have a specified minimum monthly income to qualify for the loan.
– Credit score – A good credit score, usually 700 and above, is needed to be eligible for the loan.
– Turnover – In the case of self-employed borrowers, lenders might specify a minimum business turnover before granting the loan.
Check your eligibility and qualify on the specified parameters to get the funds sanctioned.
- Documentation
You would have to submit a set of your documents for loan processing. Common personal loan documents include –
– Identity proof like your Aadhaar card, PAN Card etc.
– Proof of your age, like your Aadhaar card, passport, birth certificate, etc.
– Address proof like your utility bills, rent agreement, property deed, Aadhaar card, driving license, etc.
– Bank statement for the last 3-6 months
– Signature proof
– Photographs
Keep these documents handy for quicker sanctions.
- Affordable EMIs
The loan EMIs should be budget-friendly. Use the IDFC FIRST Bank Personal Loan EMI calculator to work out the most affordable solution by changing the loan amount and/or tenure.
In a nutshell
According to the ‘Indian Borrowers Sentiment Report’ survey, 81% of millennials are planning to get a personal loan in the near future. This would keep the personal loan trend on the upswing. If you are also in the market for a loan, you should know how to get a personal loan easily. Look for the most favourable loan terms, like those offered by IDFC FIRST Bank Personal Loans and fulfil your financial obligations while keeping your pockets happy.
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