India’s Growing Debt : 5 Potential Reasons Of Increasing Loans

Government debt has grown across all countries as a result of the Covid-19 issue. The same is true of India. Even while financial markets have been accepting of increasing debt levels, rating agencies and investors are keeping an eye on the road that will return debt to a sustainable level, especially for developing markets.

In FY21, India’s debt-to-GDP ratio increased to 87.8%. It is anticipated to somewhat decrease to 87.4% in FY22, with strong nominal growth helping to do so. Government debt ratios increased during the pandemic as governments around the world offered financial assistance to fight the disease. Although it is anticipated that it will decrease to 55% in 2022, the median “BBB” debt ratio increased from around 42% of GDP in 2019 to 60% in 2021.

In this article we will discuss about the top 5 Potential reasons for the increasing loans in India,

1. Debt consolidation

Numerous folks consider themselves in debt as a result of the extensive availability of numerous borrowing tools. By combining all of your bills into one payment, a personal loan in India can assist you in this situation while also enhancing your credit history. Personal loans have cheaper interest rates than many other types of loans, as well. This financial solution can thus replace all of your high-interest loans. Debt consolidation is one of the primary factors influencing the acceptance of personal loans in India. In order to pay off just one loan EMI rather than tracking and repaying numerous, many debtors utilise personal loans to pay off credit card debt and foreclose on other loans. Therefore, consolidating your debt with the help of personal loans might be quite beneficial.

2. No usage restriction on personal loan

The main advantage of personal loans is that they can be used for any purpose. With home loans and auto loans, that are only available for a specific purpose, this isn’t the case. A personal loan can therefore be used to meet any financial need, apart from a home loan, that can only be used to buy real estate, and a car loan, that can only be used to buy a car. A personal loan can be used to cover expenses like travel, home improvements, new furniture and appliances, wedding costs, unanticipated medical costs, schooling, purchasing a used car, etc.

3. Flexible tenure

For instant loans, the normal loan repayment time is 12 to 60 months. The duration that best meets your requirements is your choice. You ought to be informed that longer-term personal loans have interest rates that are much higher than shorter-term loans. Repaying a quick loan is easy. With features like customizable repayment lengths and inexpensive EMIs, loan repayment is made easier. Furthermore, getting a fast loan and paying your EMIs on time will improve your credit score. Remember that while a longer loan term results in smaller EMIs, the total amount of interest paid will be higher. You can choose repayment choices that suit your preferences and financial condition by being flexible.

4. Affordable interest rates

The interest rate is one of the very first factors customers consider when applying for personal loans. At the moment, personal loans are offered by non-banking financial firms as well as banks at reduced interest rates. It is among the most alluring in the lending industry because it starts at 10.99%. To get the lowest personal loan interest rate in India, apply at Poonawalla Fincorp.

5. Minimum documentation in Indian Banks

Due to the fact that personal loans are unsecured, not many documentation are required. Banks, financial institutions, and other lenders don’t require as much documentation for personal loans as they do for mortgages. The reason why personal loans are so well-liked is because few supporting documents are needed. You simply need to present the bare minimum of proof of your address, identity, and income in order to apply for a personal loan.