New research by finder.com.au has found that 46 per cent of those aged between 24 and 38 have signed up for at least one personal loan, greater than any age cohort.
Cars are the main reason why Generation Y have loaded up on a personal loan, with 19 per cent attributing it to financing a vehicle, while 5 per cent took up a loan for holidays.
Conversely, only 5 per cent of Millennials have taken out a loan for unforeseen expenses such as medical emergencies, car accidents and household mishaps.
Kate Browne, personal finance expert at finder.com.au, said that while Millennials were driving borrowing, it was vital for them use loans responsibly.
“Personal loans can have a lower interest rate than credit cards and a repayment schedule means your debt comes with an end date,” said Ms Browne.
“That said, taking out a personal loan for a consumer-driven shopping spree is very different to taking out a personal loan for a renovation which will add value to your home.
“They are entering a stage in their life they’re starting to earn more money and have to build up a credit history that appeals to lenders.”
Further, a survey of 2,011 Australian adults showed that two out of five Australians have taken out a personal loan, with 37 per cent having used a personal loan for planned purchases such as cars, holidays, renovations, education and special occasions such as weddings.
Ms Browne said the dwindling reliance on loans for emergencies may indicate we’re getting better as a nation at saving.
“Planning for the unplanned is key to ensuring a personal loan is not your only option when things go wrong,” said Ms Browne.
“Given only a small portion of Aussies are relying on lenders for financial help when things turn pear-shaped could mean we’re getting savvier with our money.”