The personal loan segment is currently experiencing what experts call a watershed moment, with more people getting onto loan apps and embracing digitization in a big way. In fact, these loans have penetrated both urban and rural areas in sizable figures, being the chosen financial solutions for most people with regard to meeting a plethora of requirements.
The personal loan trends for 2022 can be clearly gauged by reports that state how retail loans went up to 40 million (12.5% growth) over a year by March 2021. This went up further by almost 50% to touch 60 million by end-March, 2022. The Equifax and Andromeda Indian Retail Loans Overview- August 2022 report states how personal loan book sizes went up by 33.33%, touching Rs. 8 lakh crore as compared to Rs. 6 lakh crore earlier. The figures were around Rs. 5 lakh crore as of March 2022. This clearly shows how a large chunk of Indians is confident about applying for personal loans today.
Another TransUnion Credit Industry Insights Report indicates growth in personal loan balances which touched $192 billion, indicating yearly growth of 31%. This makes it a global phenomenon. For the period between the first quarter of 2021 and the same period in 2022, originations in this segment went up by 31.7% for Gen Z customers. This is a trend that points to a younger demographic for personal loans, not just in India but also worldwide. This could be the primary focus for most lenders in the times to come.
Some other trends worth noting in 2022
- Digitization of the space- It is apparent that personal loans have majorly shifted online, even in India. People now prefer to apply for these loans online in the comfort of their homes, since they are easier to obtain than many other types of loans. The advent of multiple loan apps like LazyPay and others has empowered consumers even in under-banked and un-banked regions to apply for personal loans in order to either fulfil their aspirations or take care of pressing requirements.
- Credit Line Facilities- Many loan apps and platforms also offer what is a credit line or a credit limit. They are approving a certain figure for the borrower as the credit limit or credit line. The borrower can then withdraw money from this sum as per his/her requirements. The interest is only payable on the amount that is withdrawn and with every repayment, the available credit in the consumer’s account keeps increasing likewise. This is one of the biggest personal loan trends in 2022.
- Quick eligibility checks and applications- Most loan apps and portals have simplified the application procedure considerably. Borrowers only have to apply by filling up some basic details and checking their eligibility online in a matter of minutes. This has naturally made the loan procedure simpler and more transparent for borrowers as a result.
- Minimal documentation- Most loan apps only take minimal data like personal identity proof, PAN proof, and a photograph for sanctioning loans. They sometimes require added income documentation but the overall documentation required is minimal and hassle-free. This is another trend that has emerged from the shift towards a 100% digital process.
- Quicker approvals and processing- With increasing customer demand, most loan apps and platforms are approving applications in a matter of hours or even less. There is also quicker processing with the help of advanced verification technologies. This is leading to quicker disbursals for customers, helping them meet their needs faster.
- Credit history is no limitation- Many first-time borrowers do not possess a credit history, leading to their applications being turned down by several lenders. However, new-age loan apps are accepting these applications, provided they meet other criteria pertaining to age, income, and basic details. They are ensuring suitable platforms for people to meet their needs while building up their credit history and score with timely and disciplined repayments.
These are some of the biggest personal loan trends that we can witness in 2022 and they should play a major role in the sector in future years as well.