Table of Contents
Overview
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- What you need to know
- Key issues covered in this Report
- Definition
- COVID-19: Market context
- Economic and other assumptions
Executive Summary
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- Top takeaways
- Personal finances are not improving
- The COVID-19 crisis has made US adults state that they are even more averse to taking on debt…
- …but the interest in personal loans prevails
- Consideration of non-traditional lenders, credit assessment is increasing
- Market overview
- Impact of the COVID-19 pandemic on lending
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- Figure 1: Short-, medium- and long-term impact of the COVID-19 pandemic on lending, November 2020
- Opportunities and Challenges
- Re-emergence
- Recovery
The Market – Key Takeaways
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- US adults are paying down debt during COVID-19 pandemic
- Delinquencies are starting to creep up
- Unemployment continues to drop, but remains above pre-pandemic levels
Market Size
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- US adults are paying down debt during COVID-19 pandemic
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- Figure 2: Total US non-housing consumer debt, by type, Q3 2003–Q2 2020
- Stimulus money caused personal savings rate to skyrocket, then rapidly decline
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- Figure 3: Personal saving rate, January 2008–November 2020
- The COVID-19 crisis is slowing the growth of the number of auto and credit card accounts
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- Figure 4: Number of auto and credit card accounts, Q2 2003–Q2 2020
Market Factors
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- Delinquencies are starting to creep up
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- Figure 5: Percent of accounts 90+ days delinquent, by type of loan, Q2 2003-Q2 2020
- Credit card balances are dropping faster than credit limits
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- Figure 6: Credit card balance, total limit, and available limit, Q2 2003 - Q2 2020
- Unemployment continues to drop, but remains above pre-pandemic levels
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- Figure 7: Unemployment and underemployment, January 2007–November 2020
- DPI down from the stimulus peak, but still higher than 2019
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- Figure 8: Disposable personal income, change from previous period, January 2007–October 2020
- Consumer confidence rebounds, and continues upward climb
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- Figure 9: Consumer Sentiment Index, January 2007–October 2020
Companies and Brands
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- Subprime lenders took a bigger slice of the mailbox
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- Figure 10: Rise direct mail pieces, October 2020
- Figure 11: SpotLoan mail July 2020
- Figure 12: Plain Green mail September 2020
- Consolidating credit card debt remained a popular message
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- Figure 13: OneMain direct mailer, October 2020
- Lenders promoted specific types of loans for those staying near home
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- Figure 14: Discover digital ad, 2020
- Figure 15: SoFi digital ad, 2020
- Microloans and BNPL step up competition against personal loans
- Microloans
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- Figure 16: US Bank Small Loan email, March 2020
- BNPL (buy now, pay later)
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- Figure 17: BNPL digital ads, 2020
The Consumer – Key Takeaways
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- Most consumers have at least one type of debt
- Banks are used most for loans
- Parents will be applying for loans
- The COVID-19 crisis is challenging consumer finances
Type of Debt
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- Most consumers have at least one type of debt
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- Figure 18: Types of debt, October 2020
- Debt is not spread evenly across generations
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- Figure 19: Types of debt, by generation, October 2020
- Having children is a primary driver of debt
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- Figure 20: Types of debt, by parental status, October 2020
- Credit card debt most prevalent
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- Figure 21: Credit card debt, by generation, October 2020
- Men are more likely to have personal loans
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- Figure 22: Type of debt, by gender, October 2020
Interest in Using Personal Loans
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- Banks are used most for loans
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- Figure 23: Interest in personal loans, October 2020
- Interest in personal loans is highest among young people
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- Figure 24: Interest in personal loans, by generation, October 2020
- Hispanics are most interested in non-traditional options
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- Figure 25: Interest in personal loans, by Hispanic origin, October 2020
Reasons for Taking Out a Personal Loan
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- Refinancing other debt is most popular reason
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- Figure 26: Reasons for taking out a personal loan, October 2020
- Parents’ needs are different
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- Figure 27: Reasons for taking out a personal loan, by parental status, October 2020
Plans to Open A Personal Loan
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- Many young Hispanics will be in the market for a loan
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- Figure 28: Plans to apply for a personal loan, by Hispanic origin, October 2020
- Parents will be applying for loans
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- Figure 29: Plans to apply for a personal loan, by parental status, October 2020
Important Factors in a Personal Loan
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- Interest rate is the most important factor in deciding on personal loans
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- Figure 30: Most important factors in choosing a personal loan, October 2020
- To young consumers, online applications are more important than existing relationships
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- Figure 31: Most important factors in choosing a personal loan, by generation, October 2020
- Black adults have slightly different priorities
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- Figure 32: Most important factors in choosing a personal loan, by race, October 2020
Lending Effect on Financial Situation
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- Personal finances are not improving
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- Figure 33: Lending effect on financial situation, November 2019 vs October 2020
- Men are struggling more than women
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- Figure 34: Lending effect on financial situation, by gender, October 2020
- Parents are more susceptible to default
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- Figure 35: Lending effect on financial situation, by parental status, October 2020
Attitudes and Behaviors toward Lending
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- Half of all consumers are now averse to debt
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- Figure 36: Attitudes and behaviors toward debt, by age, October 2020
- Men are having more trouble with loans
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- Figure 37: Attitudes and behaviors toward debt, by gender, October 2020
- Young people are stressed about debt – but are comfortable with even more
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- Figure 38: Attitudes and behaviors toward debt, by generation, October 2020
- Some Black adults are considering non-traditional lenders before their own banks
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- Figure 39: Attitudes and behaviors toward debt, by race, October 2020
- Non-traditional lenders attract those with lower credit scores
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- Figure 40: Attitudes and behaviors toward debt, by credit score, October 2020
Appendix – Data Sources and Abbreviations
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- Data sources
- Consumer survey data
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
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