Consumer credit: ‘Almost half of first time borrowers below 30; small ticket loan demand jumps’ – About Your Online Magazine


Across a significant diversity of borrower profiles, 49 percent of first-time borrowers were under 30, 71 percent were based in non-metropolitan locations, and 24 percent were women in 2020, a TransUnion Cibil reports.Google report said.

Small loans of less than Rs 25,000 – characterized by searches by “phone on loan”, “laptop on EMI” and “mahila loan 30000” – on loan disbursements among all personal loans rose from 10 per cent in 2017 to 60 per cent. percent by 2020, the report said.

According to the TransUnion Cibil-Google report, with disbursement speed and convenience being the hallmarks of these loans, digital sellers have the largest share in this category, with 97% of all personal loans disbursed by them below Rs 25,000. “Interestingly, small borrowers demonstrate greater loyalty with a 42-fold growth in the recurring customer base among lenders in 2020 compared to the year 2017,” the report said.

The report said there is a noticeable acceleration in credit demand from non-metropolitan locations, with 77 percent of all retail loan inquiries at the TransUnion Cibil office originating from tier 2 cities and beyond in 2020. “Plus, 70 percent of the total credit inquiries are from borrowers existing outside tier 1 cities”, he said.

“At the same time, surveys related to loans in tier 2 and tier 3 locations grew 32 percent and 47 percent, respectively, in 2020, compared to 2017. Interestingly, the sizes of inflows in loan products such as personal loans, Auto loans and durable consumer loans are geographical -agnostic,” he said. As consumer credit demand, after a brief decline in the second quarter of 2020, continued to recover to almost 90 percent from the previous period.COVID-19 At year-end 2020 levels, 55 percent of users surveyed for the study reported using an online tool or recommendation to help with their credit purchase decision.

Last year, the report shows significant diversification in consumer credit demand, with 49 percent of new retail borrowers under the age of 30, 71 percent of them located in non-tier 1 cities, and increasingly women taking advantage of credit opportunities.

Underscoring the report’s insights is a 2.5-fold increase in loan searches in non-Tier 1 cities than in tier cities between 2017-2020. Overall, growth in auto loan searches between the two halves of 2020 was the fastest, at 55 percent, with home loans following a 22 percent growth.

TransUnion Cibil MD and CEO Rajesh Kumar said: “The demand for and access to consumer credit has undergone a paradigm shift in recent years with thepandemic circumstances that further accelerated this change. ”

The report states that 64% of credit buyers say brand is an important factor in choosing their loan provider.

In 2020, 38 percent of loans disbursed for the “prime” level of credit were through FinTech NBFCs (non-bank finance company). Furthermore, these FinTech NBFCs no longer only have “urban youth” as their primary audience – 70 percent of outlays are outside Tier 1, with 78 percent of customers being Millennials (aged 25-45).

The report said there was a 2.5-fold increase in online searches for loans from non-tier 1 cities between 2017-2020, with 77 percent of all retail loan queries in 2020 coming from tier 2 cities and beyond. “In terms of product type, growth in auto loan searches between the two halves of 2020 was the fastest, 55 percent, with home loans following 22 percent growth,” he said.

Paula Fonseca