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Festive spending is rising across India while households face higher living costs, pushing many towards short-term borrowing. New financial data shows the risks behind taking a personal loan for festive shopping this season.
India saw rising demand for personal loans for festive shopping during late 2025, Economic Times reported, reflecting a broader surge in digital personal-loan sanctions, which climbed to ₹43,019 crore in Q1 FY26.
The increasing popularity of personal loans for non-essential purchases has become a key concern for financial planners. Unlike home or education loans, these loans carry higher interest and longer EMIs, making festive impulsive borrowing a potential financial burden.
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The Reserve Bank of India’s Financial Stability Report (June 2025) revealed sharp growth in unsecured retail loans, indicating increased dependency on short-term borrowing for lifestyle spending.
The report (Serial No. FSR-2025-06) can be accessed under:
RBI.org.in → Publications → Financial Stability Report → June 2025.
Key data from the report:
With online shopping events and festival sales expanding aggressively, many consumers opt for a personal loan for festive shopping because lenders promise quick approvals, minimal paperwork and festive-discount EMI schemes.
A related financial explainer from LoansJagat also highlights how credit scores influence loan approval and interest rates.
A personal loan for festive shopping seems convenient, but interest charges often increase the final cost of festive purchases significantly. Most personal loans carry interest rates between 10 percent and 24 percent annually, depending on borrower profile.
Here’s how festive borrowing becomes costly:
LiveMint previously reported that delinquency rates increase 90–150 days after festive periods, when borrowers struggle with new EMI commitments after heavy seasonal spending.
Experts also warn that impulse purchases during sale periods lead to loan applications without evaluating income stability or future financial obligations.
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India’s festive borrowing pattern has shifted notably over the past decade:
Economic Times and Business Standard both noted that younger borrowers aged 22–35 now form the fastest-growing group applying for discretionary personal loans — including festive gifts, gadgets, fashion and home décor.
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Combining this with rising living costs means many households stretch budgets beyond their capacity, increasing long-term EMI load.
Bank executives quoted in ET insist that borrowers should take personal loans only for essential or planned expenses, not short-term celebrations. Financial planners interviewed by LiveMint recommend using savings, festive sinking funds or 0% EMIs instead of unsecured loans for non-essential gifts.
Experts also stress keeping a strong credit score, as festive overspending affects loan eligibility for major future needs like home purchase or education.
A personal loan for festive shopping may feel convenient, but high interest and long repayment terms often outweigh short-term joy. Borrowers should prioritise savings-based festive planning and avoid taking long-term debt for short-lived celebrations.
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