The home loan puzzle
A decade ago, home buyers were seeking loans. Today, loans are seeking home buyers. The typical home loan seeker’s profile has undergone a complete makeover. There are no dearth of loan products to spoil her for choice. A similar story unfolds when it comes to car loans and personal loans as well.
Here’s a quick look at how the identity of the typical loan seeker has changed over the times.
Home loan sizes
A decade back, the average ticket size of a home loan was 10-20 lakhs. But today, it has more than doubled to 30-40 lakhs or more. The increasing property prices and the high disposable income of young Indians are driving this surge.
Also, home loans are buzzing in non-metros rather than in metros. All the new entrants in the banking sector and the aggressive private bankers are now eyeing prospective young buyers from the non-metros, as the metros are comparatively muted owing to escalating property prices.
The typical home loan seeker of today
- Emerging young professionals below 30 years of age and with a higher income, who see home loan as the best tax saving option
- Middle-aged professionals, who are a perennial favorite of credit managers
- Middle-aged men and NRIs who are purchasing property as an investment
- Hi-end borrowers who are taking loans in the luxury and holiday home segment
Car loan – the commonest loan
Car loans are becoming a common ingredient in an average man’s loan portfolio. As one of the top choices of an industry fresher is to own his or her dream car, the age of car buyers has dipped considerably.
The credit manager of a small city revealed that way back in 2005, customers who applied for funding a Mercedez or a BMW were very rare, and the bank treated them as HNIs. But today, this has changed a lot and funding for super luxury models and imported brands like Ferrari or a Hummer are not uncommon. There is also a huge increase in the numbers of small car buyers, as it has become a must-have to own a car soon as you enter a job.
The typical car loan seeker of today
- Youngsters below 25 years of age
- Middle class families who aspire for small car segments
- High profile businessmen who buy luxury cars
- Professionals who keep changing their car models every alternate year
Costly personal loans getting dearer
It’s common practice today to target youngsters with pre-approved loans as they tend to take quicker decisions if presented with such offers.
A metro-based bank official revealed that about 80% of personal loan applicants are youngsters, with the remaining being self-employed. Youngsters who pursue personal loans take it to fund either their unplanned investments in the form of property purchase or downpayments, or their poorly managed financial life and credit card dues.
The number of professionals seeking personal loans is very negligible. Government employees and the higher income group professionals are relatively against personal loans, as either they have other loan options or are aware of the high cost they have to pay for it.
The typical personal loan of today
- Youngsters below 30 years of age and belonging to mid-level income group
- Small businessmen who seek loans for capital raising
- Youngsters with a lack of financial discipline
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