Women Handle Loans Better Than Men: Key Trends in Auto and Personal Loans Segments
By Wilfred Sigler
We don’t just need Women’s Day to celebrate femininity, but it can certainly be an opportunity to look at how they have evolved over the years. Gone are the days when we marveled at their abilities, now is the time to empower their possibilities. This is reflected very strongly in the way they manage their careers, their finances as well as their credit. Over the past two years, the number of female borrowers has increased significantly. They realized that credit can be an important part of building a secure financial portfolio, improving their business, or even improving the lifestyle for themselves and their families.
Women are choosing loans to make sound financial decisions, and millennials are more and more experienced in this area. As women’s contribution to the workforce increases, they are now less dependent on men for their life goals. In addition, women are also willing to share financial responsibilities with their spouses and seek joint loans for large expenses.
Women are crazy about home loans
Autonomous women no longer want to depend on their families to finance their way of life. Across all loan categories, women have a larger share of the mortgage pie. In December 2019, women held 29% of mortgage loans in India. The share of female borrowers for personal loans and auto loans was 15 percent each, respectively. Although the percentage share is small, it is increasing at a phenomenal rate, indicating the growing appetite of women for credit.
Compared to men, the size of women’s ticket for loans is also higher. They are more confident with larger loan amounts when it comes to home and auto loans. A considerable number of women take out loans to start a business. This is particularly revealing of the thriving population of oriented and empowered women entrepreneurs. With the growing awareness of women about credit and the growing number of female borrowers, lenders are offering tailor-made solutions for the new group of borrowers.
Women borrowers are less risky
Reports indicate that women are less exposed to credit risk than men. A quick comparison of their delinquencies shows that they are adept at paying off their loans on time and less in default. For both home and auto loans, female borrower delinquency is 0.63% and 0.96%, which is 15 basis points and 10 basis points better, respectively, compared to male delinquency. male borrowers. They try to reimburse on time to avoid penalties and other miscellaneous charges.
This is a good practice because it plays a key role in maintaining a good credit score. Since all financial footprints contribute more to obtaining a credit score, any default can negatively affect the score. Consistent verification of billing cycles and timely payment of IMEs and credit card payments can improve credit scores.
Lately the awareness around credit scores is increasing and with an increased focus on financial inclusion people can now have access to secured loans. Women make the most of the opportunity and look to banks, microfinance companies and NBFCs for loans depending on the nature of their loan request. Lending by women-headed MSMEs also reflects this trend with an increase in loan requests.
Credit landscape by geography
India being a diverse country and akin to varieties of food and festivals, different parts of the country exhibit unique credit behaviors. Across India, women in the southern region are more credit savvy than the western and northern states. For example, Tamil Nadu, Maharashtra, Karnataka and Telangana contribute 38.6% of the total personal loans requested by women.
Increasing the availability of credit for women helps them enrich and protect their financial portfolios. They realized the power of credit and learned the ropes of avoiding defaults and planning credit well. The decline in delinquency among women is proof of their credit awareness and financial preparedness.
With a smooth loan selection process and smart technology, female borrowers have a platform to grow by taking loans with easy loan application and interest rate and option incentives. reimbursement. We hope that the entire credit ecosystem will continue to develop its capabilities to be better positioned to provide robust solutions to the emerging group of Indian borrowers.
(The author is Director – Marketing and Sales at CRIF High Mark)