1. According to Lending Tree, in the last five years, the amount of money that consumers owe on personal loans has doubled. Consumers owe approximately $125 billion on personal loan debt. This is the highest amount than it has been in at least 10 years. For most Americans, personal loans make up 1.5% of their debt. Because the average APR on these loans is higher than with other loans, the delinquency rate is higher than with other types of loans. The most common reason people secure personal loans is to help with their debt. Unfortunately, in many cases, it only increases their debt load. Those aged 40-54 have the highest balances on personal loans.
2. Even though the interest rate for personal loans is higher than with other loans, the average interest rate has declined 4% than 20 years ago. (https://www.supermoney.com/studies/personal-loans-industry-study/) Interest rates for personal loans are different among lenders. Part of this lower rate is contributed to competition among lenders. With access to online loans, there are a record number of lenders in the industry. With more lenders available to consumers, they are competing for business; therefore, they want to try to give the lowest possible rate. The lower the rate, the more money consumers will save, so they are shopping around for the best possible rate before they agree to a personal loan.
3. Experian says that currently, 36.8 million personal loans have been taken out by consumers. The consists of almost 11% of adults in the country. The reasons people apply for a personal loan will vary. Some people use it to pay off credit card debt, and some use it to pay for a large expense, such as a wedding or a vacation. One of the biggest reasons consumers apply for a personal loan is to consolidate debt. In addition, some people might have outstanding medical bills , or they might need to pay for a funeral. Whatever the reason, more people are acquiring personal loans than ever before.
4. According to Opp Loans, women are more prone to turn to payday loans than men. Women are more likely to have student loan debt and medical bills. In addition, women have less money in savings than men do. Almost 60% of women say that they have financial stress compared to 40% of men. 60% of payday loans are taken out by females. More women report that they have difficulties making it from one paycheck to another. Therefore, the financial strain forces them to turn to payday loans just to make ends meet.
5. A Forbes article states that the average term for a personal loan is between one to seven years, with most of them being less than 5 years. These are considered short-term loans and are usually based on a person’s income and credit history. You will know exactly when your loan will be repaid. Most companies do not charge any penalties for paying off the loan early. People who have a loan that is 5-7 years will have lower monthly payments than those with shorter terms; however, more interest will be paid in the long run.
6. The most common reasons people apply for personal loans is to consolidate debt and to refinance credit cards. (https://howmuch.net/articles/why-do-americans-take-out-personal-loans) In fact, 60% of all consumers take out personal loans for these reasons. It will take years to pay off multiple credit cards. By combining those payments into one payment, the payments are lower and easier to manage. It is also possible to get a lower interest rate. If used smartly, consolidating debt can save money in the long run and fix bad credit; therefore, consumers can pay off their debt faster. However, people need to be cautious because if they keep applying for personal loans, they could end up in more debt than when they started. Therefore, it might be wise for individuals to rip up the credit cards and stop applying for new credit.