A staggering 27% of personal loans in India during the first half of 2025 were taken out for travel, a first in the country's financial history, marking a seismic shift in borrowing behavior among Gen Z.
Sarthak Ahuja, an investment banker and author, sounded the alarm in a LinkedIn post. "For the first time in the history of India, the No. 1 reason to take a personal loan is not a medical emergency, home renovation or to buy an asset... but travel," he wrote.
The data paints a sharp contrast with earlier generations, who typically borrowed for essentials or long-term assets. Now, Ahuja says, Gen Z is increasingly using credit to fund what he calls "status-driven consumption."
That includes financing flights to attend expensive concerts and buying iPhones on EMIs, with 70% of iPhone sales now happening via installment payments. In a striking data point, 39% of Gen Z reportedly borrowed money for necessities like rent, groceries, and utilities in 2024.
Ahuja attributes this shift to two primary forces. First, sky-high housing prices have crushed homeownership dreams for many young Indians.
"A young Indian thinks, how can I ever afford to pay a Rs 2 lakh EMI for 20 years to buy a simple house," he noted. In response, they choose to spend on immediate gratification, luxury goods, travel, and social media-fueled experiences.
Second, fintech innovation has removed much of the friction from borrowing. With zero-cost EMIs and Buy Now Pay Later (BNPL) schemes embedded directly into checkout pages, loans under Rs 50,000 are often approved in under a minute. This has turbocharged unsecured lending for small-ticket items.
The trend mirrors and contrasts the consumer trajectory of Gen Z in China. Between 2015 and 2019, Chinese youth indulged in similarly aggressive borrowing for status purchases. But post-COVID economic stress has triggered a reversal. "That generation has shifted from revenge spending to revenge saving," Ahuja wrote.
In China, gold, specifically "gold beans" that weigh just one gram, has become a new status symbol among young savers, signaling a pivot toward financial prudence and intellectual capital. "While Indians are thinking I should borrow today because I will earn tomorrow, Chinese are thinking let me save today because I may not have a job tomorrow," Ahuja said.
The shift in India has also redrawn the map for consumer businesses. Direct-to-consumer (D2C) brands are now targeting Gen Z more aggressively, banking on their willingness to borrow for Instagram-worthy lifestyles.
Ahuja's takeaway? "If you're getting jealous of someone's holiday or iPhone on social media, don't be, know that it could be on borrowed money."
