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Personal loans accounted for $167 billion in consumer debt in the fourth quarter of 2021, increasing over the same time in 2020.
Personal loans are often unsecured, which means they do not require collateral such as a house or a car, and they can be used for nearly anything. Lenders use loan applicants’ creditworthiness, income, and debt level to qualify and establish the annual percentage rate.
Public statistics on these loans are unusually scarce compared to mortgages and student loans; however, certain credit agencies maintain information on personal loan debt. The statistics below show how personal loan debts have changed throughout time.
Personal Loan Statistics: Editor’s Choice
- Total outstanding personal loan debt in the United States is $143 billion.
- There are 21.1 million outstanding personal loans in the U.S.
- Average interest rates for personal loans vary between 10% and 28%. Those with a higher credit score can get lower interest rates.
- APRs vary considerably depending on the borrower’s credit score, ranging from 7.25% for a 720+ score to over 100% for those with sub – 600 scores.
- 19.1 million consumers currently have an unsecured personal loan, compared to the 176 million Americans with credit cards.
- In total, personal loans amount to less than 1% of total consumer debt, a fraction of credit card debt’s 7.27% share.
Personal Loan Statistics: Trends, Historical Data, & Averages
#1. The outstanding balance of personal loans owed in the U.S. is $151 billion
The outstanding balance of personal loans owed in the U.S. is $151 billion. That’s a decrease from last year’s record high of $156 billion, but it’s still the second-highest in the past 15 years.
#2. 61% plan to use a personal loan to pay off other debts
According to a recent LendingTree study of its customers, 61 percent want to utilize a personal loan to pay off other debts, with 21.8 percent using it for credit card refinancing and 39.2 percent using it for general debt consolidation.
#3. Gen X is the age group known to take out the biggest personal loans
According to TransUnion data, Gen Xers had an average loan balance of $9,522. However, if the generations were ranked in terms of delinquency rates, they would decrease linearly from youngest to oldest, with Gen Z accounting for 6.0 percent and the Silent Generation accounting for 2.5 percent.
#4. Americans with higher credit scores are more likely to have a personal loan
Historically, personal loans were offered to subprime borrowers, but financial technologychanged that a few years ago. Above-prime borrowers owned around 40% of outstanding loan balances in early 2020, up from approximately 33% in 2013.
#5. The average personal loan sizeis $7,104
According to a TransUnion credit industry survey, the average new personal loan size in the fourth quarter of 2021 was $7,104. In recent years, the average loan amount has been between $5,000 and $7,500.
#6. Online Lenders account for a huge percentage of personal loans
Banks and credit unions were formerly the go-to lenders for personal loans, but online personal loan lenders have quickly surpassed them. According to Experian’s research, financial technology businesses (online lenders) accounted for 49 percent of the personal loan market in 2019. FinTech’s originated 22% of new personal loans four years ago.
#7. The average APR on a three-year credit union loan is 8.83%
According to the National Credit Union Administration, the average APR on a three-year credit union loan is 8.83 percent. Federal credit unions cap APRs at 18%. Thus their rates are cheaper than those of other lenders. A credit union may evaluate a personal loan applicant’s standing as a member in addition to their credit profile, allowing those with fair or weak credit (less than 689 FICO) to qualify.
#8. Average personal loan balances increased by 4% or more in 17 U.S. states.
The largest average personal loan debt is held by borrowers in Washington ($28,366), Oregon ($27,165), and South Dakota ($25,174). The District of Columbia ($10,400), Hawaii ($12,562), and Georgia ($13,131) have the lowest average personal loan debt.
Furthermore, borrowers in Kentucky (11%), Nebraska (11%), and Nevada (8%) had the biggest YoY percentage increases in their average personal loan debt. Borrowers in the District of Columbia (-20%), New Jersey (-10%), and Vermont (-9%) experienced the greatest YoY percentage declines.
#9. More men than women took out personal loans in 2021.
More men than women took out personal loans in 2021. Some 59.4% of men took out a loan, while only 44.3% of women responded saying they took out a personal loan. Men also borrowed larger amounts than women. Men borrowed an average of $12,336.72, while women borrowed an average of $7,100.92.
#10. About 19.4 million Americans have a personal loan
About 19.4 million Americans have a personal loan, down from 20.2 million last year. However, even with that dip, there are about 5 million more people with a personal loan today than there were five years ago.
#11. 2.5% of personal loan accounts are 60 days or more past due
An estimated 2.5 percent of personal loan accounts are 60 days or more past due. This is a considerable decrease from last year’s 3.3 percent, but it is still significantly higher than rates for other typical loan types such as mortgages, auto loans, and credit cards.
#12. Washington and Florida have the largest number of personal loans in hardship
Across all states, 6.15% of personal loan accounts were in hardship in May 2020. The states with the largest percentage of personal loans in hardship were Washington (10.76%), Florida (10.35%), Colorado (9.02%), and New York (8.91%).
#13. Personal loans amount to less than 1% of total consumer debt, a fraction of credit card debt’s 7.27% share.
Personal loans will likely continue to represent the smallest share of consumer debt among the five primary consumer debt categories for the foreseeable future. Personal loans are significantly less popular than credit cards, with the second-smallest proportion at 7.2 percent. They let the user incur as much or as little debt as they wish and make little purchases, whereas personal loans are better suited to significant expenditures that will take more than a year to pay off.
#14. Repeat customers are a big opportunity for lenders
A recent report by Experian revealed that 67% of personal loan borrowers had a balance on their credit cards, and 31.5% of the borrowers who paid off a personal loan applied for a new loan within a few months. According to the same Experian report, 68% of borrowers that get a new loan shortly after closing another installment loan do so with the same company.
#15. Only 42% of personal loans are subprime
The personal loan industry has a reputation for being a product for high-risk customers. Although subprime borrowers continue to be highly represented, most growth is concentrated in the prime and near-prime risk tiers. As the market expands, most personal loans are going to low-risk applicants.
What Are the Statistics Revealing?
As we can see from the statistics, the popularity of personal loans has risen dramatically in the last decade, owing to Fintech lenders streamlining the application process, making them more accessible to the average American, and the unique niche they fill in the consumer debt industry that no one knew existed.
TransUnion forecasts that total personal loan balances will reach 156.3 billion by the end of 2019, which is a plausible prediction given that they’ve been rising in consecutive quarters for years.
However, there is a limit to how long personal loan growth may continue until it becomes stagnant. Personal loans will always have a “wild card” status in the consumer loan industry due to the presence of other types of consumer loans that are well-suited to their unique purpose. Still, if you need to buy a grand piano within the next week, a personal loan is probably the best option.
What Percentage of People Have Personal Loans?
Personal loans were the fastest-growing debt category in 2019, but Experian data show that this will change in subsequent years. According to the credit agency, over one-quarter (22%) of U.S. people have a personal loan. In 2019, baby boomers led the personal loan debt category with the highest average personal loan amounts ($19,253 in Q2).
How Many Personal Loans Does the Average Person Have?
According to TransUnion’s September 2020 Monthly Industry Snapshot, the average unsecured personal loan debt was $5,538. However, TransUnion also found that many consumers have more than one unsecured personal loan.
It’s not necessarily a bad thing if you have multiple personal loans. Perhaps you started a renovation project and, before the first loan was paid off completely, took out a second loan to finish it off.
Like a second auto payment or credit card, taking up an additional personal loan may match your needs and budget. However, you must wait until the first loan is paid in full before applying for another loan, or use the time until the first loan is paid off to save enough for any project(s) you have planned.
How Many Americans Used Personal Loans?
Over the last decade, the number of people with a personal loan has nearly doubled from around 11 million in 2010 to around 21 million in 2020, and personal loan debt has nearly tripled from $55 billion to $162 billion.
The personal loan amount you qualify for is tied to your income and creditworthiness. And as Gen Zers enter the workplace, increase their income, and build their credit, their loan balances may also increase.
>> More: Understanding Personal Loan Requirements
Bottom Line: Personal Loan Statistics
Even though the coronavirus pandemic changed so much and caused balances to decline for the first time in years, personal loans aren’t going away. They’re more widely available than ever before, which is generally a positive thing. They can be useful for consumers wishing to consolidate debt, refinance existing loans to lower interest rates or fund large-ticket items like a house repair or a wedding.
Furthermore, because they have fixed monthly payments, they are easier and more predictable than a credit card or some other type of loans. Our goal is to provide you with the most recent statistics from credible sources in an easy-to-understand fashion. And we hope that the above-listed personal loan statistics give you an insight into the personal loan industry and positively influence your personal loan decisions.
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