Two-wheeler loans are most popular credit product among Gen Z: Survey

Two-wheeler loan is the most popular credit product among Generation Z (those born after 1995), followed by consumption products such as consumer durables and credit cards, found a TransUnion CIBIL survey. It also stated that majority (80%) of Indian Gen Z consumers who are credit-active only have one open credit product.

The TransUnion study explored the credit activity of Generation Z in emerging credit markets including India, Colombia and South Africa, as well as established consumer credit markets including Canada, Hong Kong and the United States.

The percentage of the Indian population that was classed as Gen Z, ranging from age 0-24 as of CY 2019, was 44%, representing more than 609 million people. The percentage of the population that was Gen Z and over 18, and thus eligible to apply for credit, was 11%, almost 147 million people. The TransUnion study revealed that only 6% of this eligible group were credit active in CY 2019, nearly 9 million people. "Although India had the smallest percentage of credit active Gen Z consumers of all the countries studied, in a country as populous as India, 6% represents nearly 9 million consumers. Even among older Indian generations, credit participation is relatively low, as just 10% of the total adult population is credit active," stated the report.


Here are more findings from the survey.

The credit-active consumers with two-wheeler loans and other type of loans
For Gen Z, credit card participation is growing, but remains low compared to the wider national average. Looking at the entire adult population in India, overall credit card penetration among credit-active consumers is 21%. While 11% of Indian Gen Z credit-active consumers with a credit card is fairly low compared to other countries in the study (Hong Kong and Canada have rates above 90%), "it’s encouraging for lenders that the youngest generation is adopting cards early in their credit life," stated the report.

Consumer durables, as the second most popular consumer credit product among Gen Z consumers, are most likely to be used to buy a smartphone, personal computer or laptop, or even a television, rather than household appliances like refrigerators or washing machines often preferred by older generations.

Abhay Kelkar, vice president of research and consulting for TransUnion CIBIL said, "The popularity of two-wheeler loans among Gen Z consumers in India is a reflection of where this generation is in its career earnings and wider credit journey. For most, they are unable to afford a car, and having a motorbike or scooter is a convenient and often necessary way to get to work.”

Most popular credit products among Gen Z consumers
(Percentage of credit-active consumers with each product type)

Two-wheeler	Consumer Durables	Credit Card	Student Loan	Personal Loan
21%	13%	11%	8%	6%

Source: TransUnion study

Risk distribution
The TransUnion global study found that in all markets, the majority of Gen Z consumers are not subprime, and India was no exception. Compared to the overall credit active population in India, Gen Z consumers are more likely to be near prime or prime, and overall just over half (51%) have credit scores in the prime and above risk tiers.

Credit Tier	% of Gen Z Consumers	% Total Credit Active India Population
Super prime	2%	5%
Prime plus	9%	15%
Prime	40%	32%
Near prime	27%	23%
Subprime	22%	25%

*TransUnion CIBIL Credit Vision (CV) score tiers: subprime = 300-680, near prime = 681-730, prime = 731-770, prime plus = 771-790, and super prime = 791-900. Higher scores are indicative of lower risk. Grouped together, below prime segments constitute a CV score of =730 and prime or above a CV score of =731.