Why Millennial Women take More Loans than Men?

Women empowerment is a well sought after topic across all sectors in India. Several initiatives have been taken by the Government of India in recent times to ensure active participation of women in all spheres. As a result of which, a rising number of women in India are keen to try their luck as an entrepreneur. This has substantially led to a rising number of female loan applicants in India.

As per the survey conducted on Women borrowers #WorkingStree by an IndiaLends, it is found that:

·        76% of women make their own investment decisions.

·        88% of financially independent women contribute to their family income

·        46% of salaried women found it easier to obtain a personal loan as against 32% of self-employed women

It can be seen from the above statistics that there has been a rise in financial awareness among women.  As a result, the banks have simplified the banking facilities to further encourage the women to apply for loan products for meeting their financial requirements. As per the study conducted by the TransUnion CIBIL., the applications among women borrower had raised upto 48% between 2015 and 2018. Another study reported conducted by ZestMoney  which stated that over 20% of loans are availed by women for higher education purposes.

Let’s take a look at some of the main reasons why women obtain loans:

Personal Loan for Women

·        Personal Loans for Women are Available to help them plan their expenses well before time. It can be related to getting personal loans to finance their wedding, travel, higher education or manage their financial requirements that arise time-to-time. Many lenders offer personal loans for women at attractive interest rates.

·        With attractive features such as instant loan approval and quick disbursal facilities encourage the women to get loans up to Rs. 25 lakhs.

Business Loan for Women

·        To encourage the entrepreneurial spirit among women, prominent lenders in India have launched several loan schemes that fulfill this growing segment.

·        To make business loans attractive amongst women, several financial lenders offer loans with prominent features such as low-interest rates, zero collateral, nominal processing fees and long tenures that can go up to 10 years.

 

Home Loan for Women

·        With financial independence, home loan lenders offer attractive facilities such as simple eligibility, lower interest rate, long repayment tenures, and taxation benefits to encourage active participation among women.

·        Women’s participation in home loans is actively encouraged through the Government scheme of the Pradhan Mantri Awas Yojana (PMAY) that offers an interest subsidy up to Rs. 2.67 lakhs. This has led to a 6% rise in the women applicants in India for home loans.

 

What Causes Women to take Loans?

With the Millennial Women becoming Financially Independent, certain factors contribute to the reason behind increasing women opting for loans:

 

·       Rising financial awareness among working women has increased. This has led to an increase in their purchasing power and the confidence to opt for loans and the ability to repay through their salary or business income.

 

·        Better incentives for women are now extended by the banks on home loans such as lower interest rates and lower stamp duty to pay on property registration. Such benefit has given the power to get Home loans in their name which has led to a rise in contribution amongst women.

 

·      With relaxed eligibility criteria and lower interest rates on any loans (business loan, personal loan, home loan or credit cards), it has led to an increase in the ownership of dedicated financial products amongst women.

 

·  Most millennial women come from a double-income family background whether spouse or parents make their profile better even though they are contributing to the family income. This will increase their eligibility for a higher loan amount.

 

·      With the rising awareness of credit score and getting onto the average CIBIL score of over 770+ makes the approval of loan applications from the women borrowers.

 

·   With millennial women’s go-getter attitude towards their regular expenditures on travelling, shopping, dining or leisure has prompted the lenders to extend major offerings to them on loan products. For example : State Bank of India offers low-interest rates at 8.60% on home loan products.

 

·      With increasing participation of women as an entrepreneur has seen a rising number of women borrowers for loan products such as business loans or personal loans so as to fulfill their entrepreneurial dreams.

 

 Conclusion

Though several loans for women are available at a discounted rate of interest, it is recommended to compare various loan offers before making a final decision. This will allow them to enable a loan that best suits their requirements. A good CIBIL score can assist women to obtain a personal loan with reasonable terms. Since a high credit score indicates a good repayment capability, most lenders are keen to offer higher loan at a relatively reduced interest rate. No doubt, a lower interest rate can minimize the repayment burden but also reduce the entire borrowing cost in the long run.

Women can also use personal loan apps such as MoneyTap for getting multipurpose personal loans. The lesser documentation, speedier loan approval, and smooth loan disbursal are some of the extra benefits to avail an instant loan.

To estimate the monthly instalments, women applicants can use the EMI calculator to plan their monthly expenses wisely and make timely repayments of the loan they undertake.

Lastly, it is recommended to go through all the terms and conditions of the loan agreement cautiously before availing the loan.