Quick lending & approval procedures and the development of collateral-free credit programs have led to an increase in demand for short-term financing, driving the global personal loan market during the projected period. According to the 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 Important Aspects of the Personal Loan Market
The increase in popularity is being influenced by a number of factors, including a strengthening economy, and high-interest credit cards can be replaced with ones with lower interest rates. Fintech and other alternative lenders are expanding, consolidating 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 Loans, Credit Card Refinance Loan, Home Improvement Loan, General Purchase Loan, Moving and Relocation Loans, and Others (Medical Expenses Loans, Wedding Loan, Vacation Loans, Car Repair Loans, etc.). Based on End User, the market is categorized into Employed Individuals, Professionals, Students, Entrepreneur, and Others (Homemaker, Unemployed, Retired, etc.). Based on Tenure Periods, the market is segmented into Less than 2 years, 2 years to 4 Years, and 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 loans, which commands a significant market share. When an individual has several credit cards and wants to combine their payments into a single monthly bill, they consolidate their debt. To pay off all the accounts, they prefer to avail of 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 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 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 an 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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