Why Indians are using personal loans beyond emergencies
When planned responsibly, personal loans can support major life goals and smoothen cash flows without disrupting long-term savings.
Over the last few years, personal loans have evolved from primarily a last-resort credit option to becoming a convenient, adaptable, and quick financial tool that supports the aspirations of modern India. According to credit bureau CRIF High Mark, the share of personal loans above ₹10 lakh rose from 28.2% in FY24 to 30.9% in FY25, reflecting a clear shift in how consumers are approaching this product.
As banks and lenders expand the scope of personal loans and diversify their use cases, this category continues to remain highly relevant for borrowers. With limited documentation, flexible tenure options, and faster disbursement, the personal loans are now being used for a wider set of lifestyle and wellness needs—including elective medical procedures, often through convenient EMI structures.
This evolution is particularly visible among Gen Z consumers, who prioritise meaningful experiences, personal well-being, and self-improvement. Their preferences have steadily influenced the profile and purpose of personal loan usage. Below are some of the emerging ways Indians are utilising this versatile credit option:
Health and Wellness
Financing medical and aesthetic treatments has become more common across semi-urban and urban centres. Lenders offer personal loans in the range of ₹1–3 lakh for procedures like dermatology treatments, cosmetic interventions, hair transplants, or wellness packages, with some institutions even offering higher amounts for specialised medical needs.
This segment is expanding steadily, with healthcare and wellness service providers increasingly partnering with lenders to offer structured financing for treatments like IVF, dental care, and corrective vision procedures.
Weddings and Celebrations
India’s celebration culture is growing. Families often aim to create memorable experiences for their guests. Costs associated with venues, catering, jewellery, décor, photography, and other services can add up significantly.
A well-planned personal loan can help families manage these expenses more comfortably by protecting long-term savings and allowing structured EMI-based repayment. This gives households the flexibility to design meaningful celebrations without overextending themselves financially.
Modern Home Renovations
Whether for comfort, functionality, or long-term value enhancement, home upgrades are increasingly prioritised by modern families.
From basic improvements that may cost around ₹10 lakh in large cities to extensive kitchen or interior redesigns, renovation expenses vary widely.
Personal loans with flexible tenures allow homeowners to undertake these projects without liquidating investments or dipping heavily into their reserves.
Travel and Vacations
The travel-driven personal loans remain popular among millennials, who are more inclined to explore new destinations and prioritise experiences. Industry estimates show that travel has been a major contributor to personal loan growth over the past two years.
Borrowers typically take ₹50,000 to ₹3 lakh for domestic or international trips, allowing them to spread out the cost through manageable EMIs while preserving their monthly savings.
Financing Big-Ticket Purchases
Many consumers prefer using personal loans for high-value purchases—electronics, premium gadgets, furniture, fitness equipment—instead of taking product-specific loans. This is often driven by the convenience of a single, predictable EMI.
Younger borrowers in particular are comfortable while financing ₹2-4 lakh purchases when they have a clear understanding of the repayment horizon and impact on their monthly budget.
Supplementary Education and Skill Development
While banks offer formal education loans, some borrowers opt for personal loans to cover supplementary academic needs—such as laptops, coaching fees, skill-enhancement courses, or unplanned expenses related to new admissions. Parents may also turn to personal loans to bridge short-term requirements during last-minute admissions or unexpected cost escalations.
The ease of processing and absence of collateral make personal loans a practical alternative in such scenarios.
Note on Responsible Borrowing
While personal loans provide flexibility and convenience, borrowers should choose tenures thoughtfully.
Shorter tenures may work well for smaller, immediate expenses, whereas larger commitments—such as home renovations or celebrations—may require longer repayment periods. It is beneficial to pre-pay whenever possible, especially in months with bonuses or windfall income.
When planned responsibly, personal loans can support major life goals, smoothen cash flows, and help individuals manage short-term needs without disrupting long-term savings. Rather than being viewed purely as a debt, they can enable progress, stability, and opportunity when matched with a sound repayment strategy.
The author is Amit Pathak, business head (personal loans) at Kotak Mahindra Bank.
