Medical emergencies drive urban Indians to personal loans, says study

Rising medical costs and insurance gaps are pushing more urban Indians to take personal loans for healthcare, with reliance highest in Tier-I cities, a Paisabazaar study shows

Medical emergencies are increasingly pushing urban Indians towards personal loans, highlighting gaps in health insurance coverage and the rising cost of medical care, according to the latest consumer research report by Paisabazaar.

 

The study found that 11 per cent of personal loan borrowers across India availed credit to meet healthcare and medical expenses. The dependence is higher in large cities, with 14 per cent of borrowers in Tier-I cities taking personal loans for medical needs, compared to 10 per cent in Tier-II cities and 8 per cent in Tier-III towns.

 

The report is based on interviews with 2,889 personal loan borrowers across 23 cities and towns and offers insights into changing borrowing behaviour across regions, age groups and income segments. The findings point to a growing reliance on unsecured credit not just for emergencies but also for essential household needs, life events and aspirational spending.

 

Santosh Agarwal, chief executive officer, Paisabazaar, said: “Borrowing decisions today are shaped as much by life events, aspirations and urgency as by interest rates or eligibility. As consumer behaviour evolves rapidly, it is becoming increasingly important for the ecosystem to understand these shifts and enable responsible, transparent and inclusive credit delivery.”

 

Beyond healthcare, borrowers cited day-to-day essential expenses, urgent home repairs and weddings or celebratory events as key reasons for availing personal loans. Overall, 48 per cent of borrowers said they took loans for essential requirements, while 36 per cent borrowed for aspirational needs and 16 per cent for business investments. The study also noted that Tier-III borrowers are significantly more likely to borrow for daily necessities compared to their Tier-I counterparts.

 

While digital lending is expanding, offline channels continue to dominate, with only 32 per cent of borrowers availing personal loans online. Speed of disbursal emerged as the strongest driver of customer satisfaction across both online and offline channels. Despite high awareness of credit scores, deeper understanding remains limited, with only 7 per cent of borrowers fully aware of how credit scores impact loan pricing and approvals.

     

Medical emergencies are increasingly pushing urban Indians towards personal loans, highlighting gaps in health insurance coverage and the rising cost of medical care, according to the latest consumer research report by Paisabazaar.

   

The study found that 11 per cent of personal loan borrowers across India availed credit to meet healthcare and medical expenses. The dependence is higher in large cities, with 14 per cent of borrowers in Tier-I cities taking personal loans for medical needs, compared to 10 per cent in Tier-II cities and 8 per cent in Tier-III towns.

   

The report is based on interviews with 2,889 personal loan borrowers across 23 cities and towns and offers insights into changing borrowing behaviour across regions, age groups and income segments. The findings point to a growing reliance on unsecured credit not just for emergencies but also for essential household needs, life events and aspirational spending.

   

Santosh Agarwal, chief executive officer, Paisabazaar, said: “Borrowing decisions today are shaped as much by life events, aspirations and urgency as by interest rates or eligibility. As consumer behaviour evolves rapidly, it is becoming increasingly important for the ecosystem to understand these shifts and enable responsible, transparent and inclusive credit delivery.”

   

Beyond healthcare, borrowers cited day-to-day essential expenses, urgent home repairs and weddings or celebratory events as key reasons for availing personal loans. Overall, 48 per cent of borrowers said they took loans for essential requirements, while 36 per cent borrowed for aspirational needs and 16 per cent for business investments. The study also noted that Tier-III borrowers are significantly more likely to borrow for daily necessities compared to their Tier-I counterparts.

   

While digital lending is expanding, offline channels continue to dominate, with only 32 per cent of borrowers availing personal loans online. Speed of disbursal emerged as the strongest driver of customer satisfaction across both online and offline channels. Despite high awareness of credit scores, deeper understanding remains limited, with only 7 per cent of borrowers fully aware of how credit scores impact loan pricing and approvals.