Debt Consolidation Loans are Fueling the Global Personal Loan Market Growth
Quick
lending & approval procedures and the development of collateral-free credit
programs has led to an increase in demand for short-term financing, driving the
global personal loan market during the projected period.
According
to TechSci Research report, “Personal Loan Market – Global Industry Size, Share,
Trends, Competition, Opportunity, and Forecast, 2018-2028F” The global personal loan market is projected to grow as these personal
loan interest rates are typically fixed and stable throughout the consumer's
loan repayment period. Personal loans are also drawing in more customers
because of higher borrowing limits and low interest rates, becoming a key
factor in the market's expansion.
The
increase in popularity is being influenced by a number of factors, including
strengthening economy, high-interest credit cards can be replaced with
ones with lower interest rates. Fintech and other alternative lenders are
expanding, consolidation of debt desire to repay a loan in a certain
amount of time to borrow more than what is permitted on a credit
card, Fintech companies offer a simple application process and quick
decisions, an increase in data aggregators and lead generation companies
offers consumers a wide range of options for shopping around.
Rates
for online loans typically range from 5.99% to 35.99%. An online lender might
focus on a particular market, such as people with bad credit or those looking
to consolidate debt, which can affect the interest rates offered. Contrarily,
data from the Fed shows that the average APR for a two-year bank loan is 8.73%.
Large banks favor clients with excellent or good credit (690 or higher), and
some banks provide benefits or rate reductions to existing customers.
According to Experian which is a data analytics and
consumer credit reporting company, the generation of baby boomers (the
generation of 1946–65 age group) has the highest average personal loan debt. The
average personal loan debt of younger consumers is increasing more quickly, and
Generation Z and millennials are catching up.
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The global Personal Loan
market is segmented based on Purpose, End User, Interest Rate, Tenure Period, Region,
and Competitional Landscape. Based on Purpose, the market is further fragmented
into Debt Consolidation Loan, Credit Card Refinance Loan, Home Improvement
Loan, General Purchase Loan, Moving and Relocation Loan, and Others (Medical
Expenses Loan, Wedding Loan, Vacation Loan, Car Repair Loan, etc.). Based on
End User, the market is categorized into Employed Individuals, Professionals,
Students, Entrepreneur, Others (Homemaker, Unemployed, Retired, etc.). Based on
Tenure Periods, the market is segmented into Less than 2 years, 2 years to 4
Years, More than 4 Years. The market analysis also studies the regional
segmentation, which is divided among North America, Europe, Asia-Pacific,
Middle East & Africa, and South America.
Among
the Purpose category, the Debt Consolidation Loan category is the most
developed market for personal loan, which commands a significant market share. When
an individual has several credit cards and want to combine their payments
into a single monthly bill, they consolidate their debt. To pay off all
the accounts, they prefer to avail a personal loan that is sizable enough,
through which they can repay the lender over the desired months.
A financial report states that in the United States, in 2018, the average
amount for debt consolidation loans was USD12,670 and the average amount for
credit card refinancing loans was USD14,107. Because of this, there is
consistently a high demand for personal loans, which is anticipated to spur the
market’s growth.
Key
market players in the Global personal loan market include:
- Avant, LLC
- Goldman Sachs (Marcus)
- Wells Fargo & Co.
- Barclays PLC
- DBS Bank Ltd
- JPMorgan Chase & Co.
- American Express Company
- Citigroup, Inc.
- Truist Financial Corporation
- Social Finance, Inc.
- LendingClub Bank
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North
America region is an evident leader in the global personal loan market,
and the presence of a sizeable number of financial and non-financial
institutions plays a significant role in the personal loan sector.
Additionally, increased collaboration between banks and marketplace lenders is
being observed in the United States. These partnerships will aid in scaling up,
increasing investor and borrower awareness, and possibly even lowering customer
acquisition costs.
"Personal
loans are typically quite simple, as they only require upfront payment in
exchange for a set loan amount, a set interest rate, and set monthly payments.
In addition, personal loan debt is increasing quickly and is not likely to stop
anytime soon. This is due to increase in credit card debt and will probably do
so for the foreseeable future. These are relevant factors that are expected to
significantly contribute in the personal loan market, in the forecast period.” said
Mr. Karan Chechi, Research Director with TechSci Research, a research based
global management consulting firm.
Personal Loan Market - Global Industry Size, Share, Trends,
Opportunity, and Forecast, 2018-2028F Segmented By
Purpose (Debt
Consolidation Loan, Credit Card Refinance Loan, Home Improvement Loan, General
Purchase Loan, Moving and Relocation Loan, and Others (Medical Expenses Loan,
Wedding Loan, Vacation Loan, Car Repair Loan, etc.)), By End User (Employed
Individuals, Professionals, Students, Entrepreneur, Others (Homemaker,
Unemployed, Retired, etc.)), By Tenure Periods (Less than 2 Years, 2 Years to 4
Years, More than 4 Years), By Region, Competition” 2018-2028F, has evaluated the future growth potential of global
personal loan market and provides statistics and information on market structure,
size, share, and future growth. The report is intended to provide cutting-edge
market intelligence and help decision-makers take sound investment decisions.
Besides, the report also identifies and analyzes the emerging trends along with
essential drivers, challenges and opportunities present in the personal loan
market, globally.
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