You must’ve heard your parents say, “Zamana badal gaya hai!” And honestly, they’re not wrong, especially when it comes to taking loans. For an entire generation, taking on karza (debt) was almost a taboo – something to be avoided unless absolutely necessary. Fast forward to today, and borrowing has not just been normalised, it’s been glamorised. Want a new phone? Swipe. Fancy that Maldives trip? BNPL. From credit cards to Buy Now, Pay Later schemes, India’s youth are funding desires – not just needs – through loans.
And now, this shift in behaviour is clearly visible in the numbers: India’s outstanding personal loan debt is at a record high. But what’s driving this borrowing spree? Who’s borrowing and why? And more importantly, at what cost?
Let’s dig in.
The Vacation Loan Boom: Easy Travel, Easier Credit
As the festive season rolls in and long weekends fill up your calendar, the idea of a quick getaway becomes hard to resist. But here’s the catch – holidays have become expensive, and not everyone has the savings to match their aspirations. The answer – Loans.
A 2025 consumer insights survey by Paisabazaar reveals a striking trend: 27% of Indians now take personal loans to fund vacations. That’s more than 1 in 4 people borrowing just to travel – a clear sign of how leisure is being financed more than ever before.
The surge is being fuelled by younger generations. Among Gen Z (aged 20-30), holiday loan usage jumped from 14% in H1 2023 to 29% in H1 2025. Millennials (aged 30-40) aren’t far behind, leading the charge with 47% of the total holiday loan pie.
Interestingly, it’s not just the number of people borrowing, it’s also the size of the loans.
In 2025: 30% of holiday loans fell in the ₹1–3 lakh range (up from 13% in 2023),
Loans between ₹50,000–1 lakh jumped from 12% to 20%,
And even small loans under ₹50,000 rose sharply from 2% to 15%.
The demographic – private-sector salaried professionals, making up 65% of the borrowers. With stable paychecks and access to credit, they’re the most likely to swipe now and sort later.
So, What’s Really Going On?
It’s not just holidays. A deeper behavioural shift is underway.
A Business Today report notes that 40% of retail loan demand now comes from Indians aged 18–30. And this comes at a time when India’s household savings are at a 50-year low, while unsecured loans, especially personal loans and credit card debt, are soaring.
The RBI’s Deputy Governor J. Swaminathan recently flagged the trend, warning that unsecured retail loans have grown at an alarming 33% over the last few years.
So while vacations might be the shiny surface, what’s happening underneath is a brewing storm, one that could shake the foundation of India’s consumer credit ecosystem.
Home Loans Plateau, But Big-Ticket Borrowing Still Has a Pulse
While India’s appetite for credit is growing, not all loan categories are booming equally. Take home loans, for instance.
The home loan portfolio did clock a steady 13.1% growth, but a closer look reveals something else: new originations have slowed to just 2.7% year-on-year, a significant drop from the 9.9% seen the year before. Add to that a 5.4% fall in volumes, and it’s clear, rising property prices and stricter lending norms are starting to bite.
Simply put, people still want homes, but fewer are qualifying or taking the plunge. The focus seems to be shifting toward bigger loans for fewer borrowers, rather than a mass-market borrowing frenzy.
Now for the all grinding question – why are India’s youth drowning in unsecured debt?
While home loans are slowing, unsecured debt among young Indians is rising fast and it’s not without reason.
Here’s what’s pushing the younger crowd deeper into a debt spiral:
1. Mini-Loans, Major Impact
Fintech apps have made it ridiculously easy to borrow small sums, as little as ₹25,000, in just a few clicks. These “bite-sized” loans might seem harmless, but when stacked up, they lead to serious financial strain. The EMI system, with its shiny monthly installment promise, only adds to the illusion of affordability.
2. Swipe First, Think Later
Easy access to credit cards and small-ticket personal loans means even those with thin credit files can borrow instantly. Minimal paperwork, zero collaterals, and “instant approval” offers are pulling young users in, often before they fully understand the terms.
3. Lifestyle Creep
From the latest iPhones to destination weddings, the aspirational lifestyle game is strong. But for many, income levels haven’t caught up. So, they bridge the gap with credit, often to look successful rather than be financially sound.
4. Rising Defaults
There’s trouble brewing on the repayment front too. According to Business Today, credit card delinquency rates jumped 2.9% as of June 2023, suggesting that many young users are falling behind on dues, a slippery slope toward compounding interest and mounting debt.
Rise of a New Industry: The “Debt Saviour” Companies
With unsecured loans surging, a new business opportunity has emerged in the form of – Retail Debt Resolution.
These companies step in when things go south, offering: Debt consolidation, Negotiation with creditors, Financial counselling
Their goal is to help stressed borrowers take back control of their finances. Think of them as the “firefighters” in a credit-fuelled blaze – though, of course, they come with fees and their own fine print.
The Last Bit, Tread Carefully
As India dives deeper into a digital, credit-driven economy, both lenders and borrowers need to pause and rethink their roles.
Lenders must focus on responsible lending – strong KYC, robust credit checks, and not just chasing volume. Borrowers, especially young ones, need to borrow smart, not impulsively. Not every swipe or EMI is worth the long-term cost.