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Hyderabad vs Bengaluru vs Delhi: Where credit/loan demand is highest among millennials

Rajeev Kumar

Medical expenses and consumer durable purchases are the top reasons why millennial availed digital loans all through 2019, according to a report by CASHe. These two were closely followed by loan foreclosure and holidays. CASHe undertakes customer data analysis on an annual basis. The report titled ‘The 2019 Millennial Loan-o-Nomics', analyzed data of an active pool of over 400,000 loan application received from customers outlining multiple data points and key insights showcasing the typical consumption patterns, buying behaviour and borrowing habits of millennial across India.

The findings reveal most of the millennials prefer to move out of their parent's place, on their own journey for financial independence. Small, personal loans are tailored to meet the present needs of millennials facing obstacles of expensive accommodation, higher education and travel. Often saddled with the repayment of hefty EMIs, the moment they land their first job, digital lending with shorter lock-in periods serve as a saviour to those with zero credit history. Emergencies, like unforeseen medical expenses, are thus the reason why 37% of millennial customers resorted to lending-a sharp increase from 31% last year, according to the report.

The CASHe data outlines the purpose of borrowing among millennial being need-oriented rather than redundant. While 'emergencies' accounted for approximately 57% of the borrowing, 'aspirations' accounted for 43%.

Surprisingly, only 10% of borrowers were women, reflecting the ratio of male to female application ratio on Cashe app. It suggests that millennial women are conservative when it comes to borrowing and spending!

Hyderabad on top

In terms of millennial credit demand compared to last year, Hyderabad topped the chart, followed by Bengaluru, New Delhi, Pune, Mumbai, Chennai, Jaipur and Ahmedabad.

Older millennials, between the ages of 31-38 accounted for about 52% of the loans taken, while the millennial cohort earning in the 25,000-50,000 category presented the highest number of borrowers at 43%, succeeded by those in the 15,000-25,000 monthly income bracket at 36%.

The data show that '71 days' is the average frequency of repeat loans, while 73% of the applicants are repeat users. In terms of loan size, a majority of them (27%) preferred small ticket loans of under Rs. 10,000 and the data indicated a significant credit demand from near-prime millennial accounting for approximately 55%. This reinforces the idea that millennials are actually quite financially disciplined-repaying loans on time and dispelling their image of being irresponsible spendthrifts.

The customer analysis also reveals some fascinating insights:

  • Considered the most tech-savvy of the current generations, millennials rely heavily on technology for communication. Thus UPI and NEFT topped as the most preferred medium of repayment.
  • 78% of millennial choose to apply for loans during weekdays, especially on Tuesdays and Thursdays.
  • While 12 pm to 4 pm was recorded as the most preferred time to apply for a loan, 5 am to 6 am was registered as the most preferred time when millennial chose to repay loans.

Despite the stark differences between the spending habits of millennials and Gen X, some things remain comfortingly constant.

  • Even with an increasing number of people living away from their families in pursuit of jobs, they continue to imbibe the spirit of Indian festivals with great enthusiasm. This is why 'Christmas', 'New Year' and 'Diwali' ranked among the top occasions when millennial availed digital loans.
  • – August, September and December represented the peak period for digital lending, as the segment actively indulged in shopping and travelling, whereas Samsung, Xiaomi and Vivo arose as the most preferred handsets for the cohort.

Commenting on the trends, CEO of CASHe, Ketal Patel said, "Millennials, I believe is one of the most misunderstood segment of the present times. Lower savings and higher spending by millennials is being caricatured to present them as financially irresponsible dreamers, much averse to reality. Their spending and borrowing behaviour reflects where they are currently in their lives – settling down, renting out, new job, starting families' etc. CASHe believes millennials are 'achievers' – independent at an early age and nurturing the attitude to grow while combating multiple challenges through financial discipline."