Holiday Season: Demand for small-ticket loans surges as holiday fever grips the nation

For the last two years – in 2020 and 2021 – Covid-19 played a spoilsport – dampening people’s festive spirit, either locking them indoors or causing them to avoid crowded places. With fears of a pandemic gone – or at least subdued – people are in no mood to miss out on the euphoria during the upcoming festive seasons of Dussehra and Diwali this year.

With post-pandemic life returning to normal, a more cavalier attitude toward celebrations, and a happy buying spirit in the air during this festive period, digital lenders like CASHe, Niro, and peer-to-peer lending platforms like LenDenClub expect demand to triple in the United States coming months. People — especially millennials — are taking out small loans to meet their diverse shopping needs.

The increase in demand can be attributed to a variety of factors – for example, credit for consumer goods has escalated thanks to a multitude of price and sale offers being offered by retail and e-commerce platforms around the holiday season. Therefore, many people borrow an advance to meet their festive needs

With offers and launches on online marketplaces leading up to festivals, Millennials seem to be on a shopping spree, borrowing money online from various lenders!

New digital lending platforms are seeing a surge in demand for millennial microcredit ahead of the festivals. P2P lending platform LenDenClub saw a 97 percent increase in demand for small loans, which has increased the number of travel loans disbursed by more than fourfold over the same period, and demand is expected to triple in the next quarter. The average ticket size of our credit class is typically between Rs 12,000 and Rs 15,000.

Similarly, digital lender CASHe is also seeing pent-up demand for loans, with applications up 35 to 40 percent monthly. The average ticket size usually ranges from Rs 25,000 to Rs 40,000. Compared to last year, monthly loan applications have increased by almost 400 percent. The increase in the credit line is more than 7 times over the previous year.

The table below shows the comparison of loans disbursed between May and August 2021 and the same period in 2022:

“We are seeing demand increasing as the holiday season approaches. Our interest rates are up 30 percent and we’re seeing a 50 percent increase in people making their journey unassisted. We expect these numbers to continue to improve over the coming weeks,” said Sankalp Mathur, Niro’s co-founder and CRO.