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As spending on weddings in India is on the rise, the interest rates for wedding loans are on the higher end, typically ranging from 10 per cent to 36 per cent per annum, according to Jefferies.
This shift comes with its challenges, notably high interest rates of up to 36 per cent per year, depending on the borrower's credit history. As per Jefferies which quotes IndiaLends in its report, approximately 20 per cent of loan applications from Indians aged 20-30 during the 2018-2019 period were aimed at financing weddings. This growing trend reflects a significant shift towards formal financing options among young adults preparing for matrimonial expenses. The Indian wedding industry is undergoing a transformation in terms of how couples finance their nuptial expenses, the global research firm said. Traditionally reliant on family savings and borrowing from close relatives, modern couples are now increasingly turning to formal financial institutions for wedding loans. The report highlights the increasing dependency on formal lending sources over traditional familial loans when expenses exceed the budget. When it comes to wedding loans, banks and Non-Banking Financial Companies (NBFCs) are the primary lenders. Banks usually offer lower interest rates compared to NBFCs, which tend to charge higher rates due to their higher cost of funding and often dealing with customers with weaker credit profiles. As a result, couples opting for loans from NBFCs may face interest rates on the higher end of the spectrum. In India, the financial burden of weddings has historically been shouldered by the families of the bride and groom. This practice, deeply rooted in cultural traditions, has seen families save for years to cover the substantial costs involved. However, in recent years, there has been a shift towards couples contributing a larger share of their wedding expenses from their own savings. This trend is reflective of the evolving social norms and the increasing financial independence of young adults, the global research firm said. The influence of the wedding industry extends far beyond the immediate beneficiaries, such as jewellers, apparel makers, and catering services. Several other sectors also experience a boost in demand during the wedding season, driven by the traditions and expectations surrounding Indian weddings. Weddings often prompt families to purchase new cars and two-wheelers as gifts or to accommodate an expanding family. This surge in demand is a boon for the automotive industry, particularly during the peak wedding season. The consumer electronics market, including high-end televisions, smartphones, and home appliances, sees a significant uptick in sales during wedding seasons. Gifting traditions and the need to upgrade household amenities drive this demand. Similarly, the home improvement sector benefits from increased investments in home renovations, with paint manufacturers and related businesses seeing a rise in demand as families prepare their homes for weddings. Given the considerable economic impact of weddings, various industries meticulously track wedding trends to align their marketing strategies and inventory management. Companies in the automotive, consumer electronics, and home improvement sectors, among others, plan their product launches and promotional campaigns around the wedding season to capitalise on the surge in demand. (ANI)
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