Debt is the new flex in India; but at what cost?

Personal loans are no longer just a financial cushion for emergencies. Increasingly, they are being used to fund lifestyle aspirations.

Data from RupeeRedee, a leading digital lending platform, shows that 47.80% of loan requests between January and July 2025 were for lifestyle-oriented expenses, ranging from rent and shopping to travel, home renovations, and gifting. This shift reveals how short-term credit is shaping both survival and aspiration in Indian households.

Medical Emergencies and Family Events

While lifestyle borrowing dominates, 20.38% of loans were taken for medical emergencies. With rising hospitalization costs and limited insurance penetration, loans have become a lifeline for many.

Family-related expenses, such as weddings, festivals, and other functions, accounted for 13.16%, reflecting deep-rooted cultural pressures. Household expenses made up 12.35%, while 6.31% went toward education—covering school fees, coaching centers, and professional exams.

Average Loan Sizes Reflect Everyday Realities

The RupeeRedee study highlights the average ticket size of loans across categories. Medical loans average ₹15,800, with some cases crossing ₹1 lakh.

Education-related borrowing averages ₹16,800, peaking up to ₹75,000.

Weddings and festivals see average loans of ₹15,300, often nearing ₹95,000 for grand celebrations. Household expense loans average ₹17,500, showing credit dependency for even day-to-day needs.

The Rise of Digital Lending Platforms

The surge in loan applications also underscores the role of fintech platforms. With quick approvals, minimal paperwork, and ease of access, more consumers are turning to digital lenders over traditional banks.

According to Artem Andreev, Director of RupeeRedee, “The borrowing trend highlights the growing dependence on personal loans to manage critical and lifestyle-driven expenses, which further reflects a shift in borrowing behaviour.”

The Hidden Costs of Easy Credit

But this trend comes with significant drawbacks. Personal loans carry interest rates as high as 36% annually, making repayment a major burden. Multiple loans can easily spiral into a debt trap, especially when late payments attract penalties.

Over-reliance on loans for lifestyle needs erodes financial discipline, leaving families exposed in times of crisis. Credit scores also take a hit, with frequent borrowing or defaults making future loans costlier.

Cultural pressures further worsen the problem, as social expectations around weddings or festivals often push families into unnecessary debt.

What This Means for Indian Households

The RupeeRedee data paints a clear picture: Indian households are increasingly reliant on credit not just to survive but also to maintain a certain lifestyle. While fintech platforms have democratized access to credit, the rising dependence on short-term loans could weaken long-term financial health if borrowers fail to manage repayment responsibly.