For years, personal loans and EMIs were India’s go-to borrowing choices. From weddings to travel to emergencies, unsecured loans became synonymous with easy credit. But times are changing. Increasingly, Indians are moving away from high-interest EMIs and embracing secured borrowing backed by gold, property, or investments.
This shift reveals not only changing financial habits but also a new strategy for managing debt smarter.
Why Indians Are Moving Away from EMIs
1. Rising Cost of Credit
Unsecured personal loans often come with 12–24% interest, leading to heavy EMI burdens. In contrast, secured loans offer 8–12% rates.
2. Strain on Disposable Income
EMIs eat into household budgets. With inflation and rising living costs, families are preferring loans that provide lower EMIs and longer tenures.
3. Credit Score Limitations
Unsecured loans rely heavily on credit scores, excluding many borrowers. Secured borrowing reduces this dependency.
Secured Borrowing: The Safer Bet
Gold Loans
Fast disbursal and lower rates.
No income proof required.
Reflects India’s reliance on gold reserves as a financial fallback.
Loan Against Property (LAP)
Higher ticket sizes for education, weddings, or business.
Longer repayment windows.
Other Asset-Backed Credit
Securities-backed loans, auto loans, and home loans.
Unlocking wealth from idle assets while keeping ownership intact.
Benefits of Secured Borrowing for Indians
Lower EMIs with reduced interest rates.
Larger loan amounts compared to capped personal loans.
Better access for those with weaker credit histories.
Financial discipline by linking credit to owned assets.
Risks to Consider
Collateral risk: Default could mean losing the pledged asset.
Valuation dependency: Gold and property prices fluctuate.
Paperwork: Longer approval times compared to instant personal loans.
What This Trend Says About India’s Economy
The rise in secured borrowing shows that Indians are becoming more cautious borrowers. While EMIs fueled consumerism, asset-backed loans reflect a shift towards financial prudence and stability. This indicates a maturing credit market where people prioritize long-term sustainability over instant gratification.
Conclusion: Smarter Borrowing for a Smarter Future
India’s shift from EMIs to asset-backed borrowing is not just a financial choice — it’s a cultural and economic transformation. Leveraging assets like gold and property is enabling households to borrow more wisely, with less burden. As lending evolves, secured borrowing may well become the preferred credit model for India’s future.
FAQ
Q1. Why are Indians moving towards secured loans?
Because secured loans offer lower interest rates, larger amounts, and reduced reliance on credit scores.
Q2. What assets can be used for secured borrowing?
Gold, property, securities, and even vehicles can be pledged for secured loans.
Q3. Are secured loans safer than personal loans?
They are cheaper and more flexible, but they involve collateral risk.
Q4. Is the trend away from EMIs permanent?
Not entirely — EMIs will still exist, but secured borrowing is gaining preference for bigger, long-term needs.
Q5. How does this trend affect India’s economy?
It indicates financial maturity, with households choosing stability and sustainability in borrowing habits.
Published on : 30th August
Published by : SMITA
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