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Consumers’ appetite and need for unsecured personal loans continues to grow

Jason Laky
Blog Post08/29/2016
Business Research
Consumers’ appetite and need for unsecured personal loans continues to grow

Despite recent concerns about the FinTech market, our data show consumers’ appetite and need for unsecured personal loans continues to grow. In the second quarter of 2016, more consumers had access to personal loans than ever before. In fact, there are now nearly 3 million more consumers with a personal loan compared to two years ago. Most importantly, consumers continue to perform well on these loans as delinquency rates remain steady.

Both total unsecured personal loan balances and average balances reached all-time highs during Q2 2016, though the serious delinquency rate reached its lowest post-recession level.

TransUnion’s Q2 2016 Industry Insights Report, powered by PramaSM analytics, also found that total personal loan balances grew 26.2% to $96 billion in Q2 2016, up $20 billion from Q2 2015. Average debt per personal loan borrower rose 9.1% from $7,102 in Q2 2015 to $7,745 in Q2 2016.

In Q2 2016, 14.79 million consumers had a personal loan balance, an increase of 1.73 million consumers from 13.06 million in Q2 2015. Only 10.33 million consumers had a personal loan in Q2 2013, reflecting the increased growth and interest in this loan product in recent years. In addition, the unsecured personal loan delinquency rate remained steady in Q2 2016 at 3.30%, a slight decline from 3.32% in Q2 2015.

Personal loan originations (viewed one quarter in arrears to ensure all accounts are reported and included in the data) grew 13.6% from 2.63 million in Q1 2015 to 2.99 million in Q1 2016. Consumers in the prime or better risk tiers made up 36.4% of originations in Q1 2016. Lenders are targeting more prime or better consumers, and the origination distribution is reflecting this shift.

Trends in the Unsecured Personal Loan Market

Unsecured Personal Loan Metric Q2 2016 Q2 2015 Q2 2014 Q2 2013
Delinquency Rate (60+ DPD) Per Borrower 3.30% 3.32% 3.68% 3.63%
Average Debt Per Borrower $7,745 $7,102 $6,501 $6,035
Prior Quarter Originations* 2.99 million 2.63 million 2.40 million 2.03 million

*Note: Originations are viewed one quarter in arrears to account for reporting lag.

Access more  consumer credit trends

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