Why millennials are on a borrowing-spree ahead of Dussehra, Diwali

By: |
September 30, 2021 2:10 PM

New digital lending platforms are reporting a surge in demand for small-ticket loans from millennials in the run-up to the festivals.

online borrowing trendsLoans for consumer goods have escalated thanks to a multitude of price and sale offerings being extended by retail and e-commerce platforms

It is raining offers and launches on online marketplaces ahead of festivals. And millennials seem to be on a buying spree, even if that requires borrowing money from various lenders online!

New digital lending platforms are reporting a surge in demand for small-ticket loans from millennials in the run-up to the festivals. For example, P2P lending platform LenDenClub has witnessed a two-fold spike in demand for small-ticket loans and it is expecting a three-fold rise in demand in the next quarter.

Similarly, another lender, CASH-e is also seeing pent-up demand for loans with a 35 -40 percent monthly increase in applications.

Reasons

Explaining the reasons behind the rise in demand for small loans, Bhavin Patel, Co-founder and CEO, LenDenClub, told FE Online, “The increase in demand can be attributed to a variety of factors. Loans for consumer goods have escalated thanks to a multitude of price and sale offerings being extended by retail and e-commerce platforms around the festive season. Therefore, a lot of people are borrowing as advance salary to meet their festive needs.”

“Unforeseen medical emergencies were also a big reason which topped the chart during Aug- Sept period. In addition, there has been an increase in the demand for loans for specific purposes such as weddings, vacations, home renovations, and the purchase of white goods, especially mobile phones,” he added.

CASHe CEO Yogi Sadana also said that during the festival season, customers often demand loans for purposes specifically related to weddings, travel, home improvement and purchase of white goods etc.

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“Most of the demand coming in from customers are for purchases to be made on e-commerce sites during the festive season. With over 20 tie-ups with e-tailers across the board, we are offering our customers with more reasons to shop with pocket-friendly EMI options. The average ticket size loans normally hover in the range of Rs 15,000 to Rs 20,000,” said Sadana.

At LenDenClub, Patel said the vast bulk of demand is for consumer goods. Millennials are availing small ticket size loans to fulfil their diverse purchasing demands. The average ticket size of our loan bracket typically ranges between Rs 12,000 and Rs 15,000.

Loan demand – 2020 vs 2021

“In comparison to last year, monthly loan applications have increased by almost 200%. The average loan amount has climbed from about Rs 9,500 to Rs 12,000. This is majorly attributed to the increase in our business scale too which has expanded at a rate of 5-7X annually. With restrictions easing, a more cavalier attitude toward celebrations and a happy spending spirit expected during this festive period, we are anticipating a three-fold rise in demand in the upcoming months,” he said.

“In the first month of the festive season, CASHe has already received close to 45,000 loan applications. Around 35% of these are loans for the festive season. As we move closer to Diwali, we are expecting the numbers to surge to around 80%,” said Sadana.

In the last festive season, CASHe received around 2,50,000 loan applications. Of these home renovation, shopping, travel and purchase of consumer goods contributed to around 65% of the total volume of loan demand, he added.

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