The personal loan market set records in 2016. According to TransUnion’s Q4 2016 Industry Insights Report, the number of consumers with a personal loan continued to climb steadily to 15.82 million and ended 2016 at the highest level since at least Q3 2009. Total personal loan balances grew $14 billion between year-end 2015 and year-end 2016, reaching $102 billion. Our report identified two important trends:
- Contrary to popular belief, mature borrowers have taken on most of these loans
- Despite meteoric growth in FinTech, younger consumers turn more to credit unions for personal loans
Growth in consumers participating in the personal loan market has driven balances over $100 billion
Outstanding personal loan balances and consumers
Baby Boomers make up the largest share of consumers with a personal loan in 2016
There’s a perception that personal loan growth has been driven by younger consumers, but our data clearly indicate that these loans are appealing to older borrowers. Some of this growth is occurring because interest rates may be lower than for other types of credit for certain baby boomer segments.
Baby Boomers comprised 32.8% of all consumers with a personal loan at year-end 2016, followed by Gen Xers (31.6%) and Millennials (26.6%). In Q4 2013, Millennials comprised just 23.5% of personal loan users, but their share grew over the past three years to reach 26.6% at the end of 2016.
|Generation||Percentage of consumers with a personal loan – Q4 2016||Percentage of consumers with a personal loan – Q4 2013|
|Gen Z (1995 and younger)||1.6%||0.02%|
|Gen X (1965-1979)||31.6%||31.4%|
|Baby boomer (1946-1964)||32.8%||36.2%|
|Silent (1945 and older)||7.3%||8.8%|
Credit unions respond to growth opportunity for Millennials
With fewer Millennials in the FinTech space than expected, we explored where they’re shopping for loans and found that credit unions are seeing membership growth with the Millennial generation. As of Q4 2016, of all consumers with a FinTech personal loan, just 26.3% were Millennials, compared to 30% of credit unions’ personal loan customers.
Personal loan lenders’ share of Millennial generation borrowers
|Lender type||Percentage of customer base in Millennial generation|
The distribution of Millennial consumers across lender types represents a healthy competitive market. Likely due to their strong relationships with members, credit unions have a slightly larger share of Millennial personal loan borrowers, but our data show that they originate smaller loans than FinTechs and other lenders.