India Gen Z borrows to spend, China Gen Z saves to survive

For the first time in India’s financial history, travel has emerged as the single biggest reason for taking a personal loan. In the first half of the year, 27% of all personal loans were used to fund travel, signalling a sharp behavioural shift among Gen Z borrowers.

The data point was flagged by investment banker and author Sarthak Ahuja, who described the trend as unprecedented in a country where personal borrowing has traditionally been linked to medical emergencies, home repairs or asset creation.

“This is the first time the number one reason for taking a personal loan is not an emergency or an asset, but travel,” Ahuja wrote, warning that the implications for household balance sheets could be long-lasting.

Borrowing for lifestyle, not assets

Ahuja argues that Gen Z borrowing reflects a move towards status-driven consumption rather than necessity-led spending. Young consumers are increasingly financing flights for high-profile concerts, holidays and premium gadgets, often through easy credit products.

One striking indicator is the smartphone market. Nearly 70% of iPhones sold in India are now purchased through EMI schemes. At the same time, 39% of Gen Z borrowers reportedly took loans in 2024 to meet basic expenses such as rent, groceries and utility bills, blurring the line between discretionary and survival borrowing.

This marks a clear departure from earlier generations, which tended to use credit for housing, education or business needs. Today’s borrowers, Ahuja suggests, are more willing to trade long-term financial stability for immediate social validation.

Housing costs, fintech ease drive behaviour

Two structural factors are driving this shift. The first is housing affordability. With property prices soaring in urban India, home ownership feels increasingly unattainable for young earners.

Ahuja notes that many young Indians struggle to imagine servicing a ₹2 lakh monthly EMI for two decades to buy a modest home. Faced with that reality, consumption today appears more rational than deferred gratification for an uncertain future.

The second factor is the frictionless nature of modern credit. Zero-cost EMIs and Buy Now Pay Later products are embedded directly into online checkout flows, while loans below ₹50,000 can be approved in under a minute. This has fuelled rapid growth in unsecured lending, particularly for lifestyle purchases.

China’s Gen Z takes the opposite path

The Indian trend stands in sharp contrast to the trajectory of Gen Z in China. Between 2015 and 2019, young Chinese consumers also borrowed heavily for status goods and experiences. That phase ended abruptly after the pandemic.

Economic uncertainty, job insecurity and a slowing economy have pushed Chinese youth towards what Ahuja calls “revenge saving”. Rather than spending to compensate for lost time, they are accumulating buffers against an unpredictable future.

One visible symbol of this shift is the popularity of one-gram gold “beans”, which have become a status marker among young Chinese savers. The emphasis has moved from conspicuous consumption to financial prudence and capital preservation.

As Ahuja puts it, Indian youth tend to think, “I should borrow today because I will earn tomorrow,” while their Chinese counterparts increasingly believe, “I should save today because I may not have a job tomorrow.”

D2C brands chase borrowed aspiration

The shift has not gone unnoticed by consumer businesses. Direct-to-consumer brands are aggressively targeting Gen Z, designing products and marketing campaigns around aspirational lifestyles made accessible through easy credit.

Instagram-friendly holidays, premium gadgets and fashion drops are increasingly sold with financing built in. For brands, borrowed spending represents demand pulled forward. For households, it raises questions about sustainability if income growth fails to keep pace with debt.

Ahuja’s final caution is aimed at social media consumers rather than borrowers. That enviable holiday or latest iPhone on a feed, he says, may not reflect prosperity at all, but a balance sheet quietly under strain.