Rising EMI trend among the youth: Have easy installments led to increased spending?
Bookings for the iPhone 18 Pro, Pro Max, and iPhone Duo will open at 5:30 PM on the 12th. Prices start at ₹1.65 lakh for the Pro, ₹1.80 lakh for the Pro Max, and ₹3 lakh for the iPhone Duo. Although Siddharth already owns a perfectly good phone, he has prepared to buy the iPhone Duo on EMI. After all, why stay behind when the latest trend is available via EMI?
It is not just about phones. EMI options are available for everything—mobile phones, new TVs, refrigerators, air fryers, home furniture, and even online clothing purchases. In the past, one had to save up or wait until one had the full amount in hand for such items. Now, however, EMI (Equated Monthly Installment) has simplified the process: pay a small amount each month and bring home the product you desire. It sounds appealing, but could this be leading us to overspend?
**The Growing Habit of Credit Among the Youth**
Senior economist Akash Jindal notes that the younger generation tends not to think long-term. They are drawn in by low EMI amounts and end up purchasing expensive items. This is precisely the strategy employed by retailers and finance companies selling goods on EMI. The new generation does not want to postpone experiences—such as buying new phones or clothes, dining at new restaurants, traveling to new places, trekking, or wildlife excursions—for a later date. For those who have just started earning or whose salaries fall short of their aspirations, EMI offers an ideal way to fulfill their desires. Furthermore, the new generation easily secures loans due to the potential for future income growth.
A TransUnion CIBIL report indicates that in the quarter ending December 2025, the number of new borrowers under the age of 35 rose by 17% compared to 2024. Individuals under 35 accounted for 58% of all first-time borrowers. During this same period, consumer durable loans—taken for items like televisions, refrigerators, and other goods—saw a 22% increase. This indicates a rising trend in using credit to purchase such items.
According to Reserve Bank of India data, personal loan credit extended by banks grew by 14% year-on-year as of March 2025. This category encompasses credit card debt, vehicle loans, and other personal loans. These figures suggest that instead of waiting to save up the full amount for lifestyle upgrades or essential items, people are increasingly opting for installment plans and loans. This trend is gaining rapid momentum among the younger generation.
**From One EMI to Many**
It might start with an EMI for a phone, followed by a need for a laptop or a television, and then perhaps a bike or household appliance purchased on installments. While each individual EMI may seem small, the cumulative amount at the end of the month can become substantial.
**What Portion of Your Salary Should Go Toward EMIs?**
Experts advise that EMIs—whether existing or new—should not exceed 30% of your total earnings. Life often brings unexpected expenses, and factors such as job uncertainty, rising costs after marriage or upon having children, income fluctuations, medical emergencies, and natural disasters must be considered. A 70-30 ratio is recommended to maintain financial stability.
**Expert Opinion on Opting for EMIs**
Akash Jindal explains that if a mobile phone costs ₹90,000, one might hesitate to pay the full amount upfront; however, if that same phone is available via an EMI of ₹3,000–₹4,000 per month, the purchase becomes much more manageable. Thus, EMIs can be helpful. Problems arise, however, when people overspend simply because goods are easily available on installments. Before committing to any EMI plan, it is crucial to consider the total amount payable, the duration of the installment plan, and the applicable interest rates and other charges. This is because opting for an EMI doesn't reduce the overall cost; it simply breaks a large sum into smaller installments. Therefore, before making a purchase, one should consider not just the EMI option but also whether the item is truly necessary. Senior economist Akash Jindal notes that the younger generation's tendency to use EMIs is beneficial for the market and economic growth.
It is a matter of supply and demand. India used to be a nation of savers; our parents and grandparents believed in saving. Today, India has become a nation of consumers and spenders—a market driven by the fulfillment of desires. There has been an influx of American culture. However, the younger generation needs to strike a balance so that EMIs do not eventually become a burden. Go ahead and fulfill your wishes and pursue your interests, but ensure that EMI payments do not exceed 30 percent of your income.
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