Table of Contents
Executive Summary
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- The issues
- Consumers are uncomfortable with the amount of debt they are carrying
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- Figure 1: Attitudes toward debt, by generation, April 2015
- Peer-to-peer lending is disrupting the industry
- Most people don’t have a solid plan to repay their loans
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- Figure 2: Have a repayment plan, April 2015
- The opportunities
- Simplify the lending experience
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- Figure 3: QuickenLoan “Simplicity” mortgage email, 2015
- Online and mobile debt management tools
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- Figure 4: Interest in debt management tools, April 2015
- Increased comfort level with debt
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- Figure 5: Attitudes toward credit and debt, by generation, April 2015
- Consumers with imperfect credit scores
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- Figure 6: Credit score, by attitudes toward credit and debt, April 2015
- What it means
The Market – What You Need to Know
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- Consumer debt is inching up again
- Less demand for loans
- Credit card balances are lower
- The economy is strengthening
Market Size
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- Total amount of consumer debt
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- Figure 7: Total consumer debt, Q1 2003-Q1 2015
- Loan demand is still increasing, but at a slower rate
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- Figure 8: Number of loan inquiries, number of loans opened and closed within past 12 months, Q1 2010-Q1 2015
Market Breakdown
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- Total debt is inching up again – but components are changing
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- Figure 9: Components of US consumer debt, Q1 2010-Q1 2015
- Mortgage debt still the largest portion of total consumer debt
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- Figure 10: Total US mortgage debt, Q1 2003-Q1 2015
- Credit card debt is declining
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- Figure 11: US credit card debt, Q1 2003-Q1 2015
- Auto loans are slowly growing
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- Figure 12: US auto loan debt, Q1 2003-Q1 2015
- Student loan debt reaching new highs
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- Figure 13: Total US student loan debt, Q1 2003-Q1 2015
- Delinquency Rates
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- Figure 14: Percentage of balances that are 90+ days delinquent, by loan type, Q1 2005-Q1 2015
Market Perspective
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- A drop in the number of those with large loan balances
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- Figure 15: Change in secured and unsecured loan balances, April 2014 vs April 2015
Market Factors
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- The economy is getting back on track
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- Figure 16: Quarterly change in GDP growth, Q1 2010-Q1 2015
- New car sales are expected to increase, although at a slower rate
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- Figure 17: Total US unit sales and forecast of new cars, 2009-19
- Personal disposable income and personal consumption expenditures are increasing
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- Figure 18: Real disposable income and real personal consumption expenditures, 2000-14
Key Players – What You Need to Know
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- Peer-to-peer lending is increasingly becoming a force
- Most have no clear plan to repay their debt
- Goldman Sachs is entering the consumer loan market
What’s Working?
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- Peer-to-peer lending is growing…and changing
- LendingClub
- Prosper
What’s Struggling?
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- Consumers are bothered by their debt, but have no repayment plan
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- Figure 19: Whether debt has an impact on lives and repayment plans, April 2015
What’s Next?
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- Goldman Sachs is entering the personal lending market
The Consumer – What You Need to Know
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- Most consumers have secured debt
- Unsecured debt most popular among Millennials
- Most don’t have a plan to repay debt
- Debt’s impact on lives
- Desire for online and/or mobile debt management tools
Debt – What Kind and How Much?
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- Secured debt balances are more than $100K
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- Figure 20: Type of secured debt held, by generation, April 2015
- Most popular types of unsecured debt – and who holds it
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- Figure 21: Type of unsecured debt held, by generation, April 2015
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- Figure 22: Discover and Wells Fargo student loan email ads, 2015
- Blacks and Hispanics have more unsecured debt
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- Figure 23: Ownership of secured and unsecured debt, by Hispanic origin and race, April 2015
- Millennials are most likely to be taking on more debt
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- Figure 24: Percentage with more debt than two years ago, by generation, April 2015
Credit Scores Still Matter
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- Gender and age affect credit scores
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- Figure 25: Credit scores, by gender and age, April 2015
- Hispanics and Blacks tend to have lowest scores
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- Figure 26: Credit scores, by Hispanic origin and race, April 2015
- Age, education, and income are primary drivers of high credit scores
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- Figure 27: Key drivers of credit score of 720 or above, April 2015
What the Debt is For
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- Auto loans are most popular
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- Figure 28: Most recent use of loan, by age, April 2015
- Hispanics are more likely to have recently taken loans
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- Figure 29: Most recent use of loan, by Hispanic origin, April 2015
- Acceptable uses of credit
- Unacceptable uses of credit
Attitudes toward Credit and Debt
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- Men feel more positively toward debt
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- Figure 30: Attitudes toward debt, by gender, April 2015
- Is debt necessary in today’s world?
- Debt affects iGen and Millennials the most
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- Figure 31: Attitudes toward debt, by generation, April 2015
- Those with low credit scores are comfortable with debt, too
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- Figure 32: Attitudes toward debt, by credit score, April 2015
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- Figure 33: Milestone and First Premier subprime credit card email ads, 2015
- Many Hispanics are worried about their debt
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- Figure 34: Attitudes toward debt, by Hispanic origin, April 2015
- Not everyone thinks debt is a good idea
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- Figure 35: Capital One direct mail ad, Citibank direct mail ad, 2015
- Figure 36: Attitudes toward debt, by gender and age, and Hispanic origin, April 2015
- What credit means to consumers
Debt Repayment is Not Planned
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- Most don’t have a repayment plan
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- Figure 37: Have a repayment plan, April 2015
- Parents are more likely to have a plan
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- Figure 38: Have a repayment plan, by parental status, April 2015
How People Pay Off Debt
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- Millennials are most likely to only pay the minimum due
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- Figure 39: Debt repayment practices, by generation, April 2015
- Parents adjust their spending to pay down debt
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- Figure 40: Debt repayment practices, by parental status, April 2015
Debt Management Tools
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- Not many want help – but if they do, they want online help
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- Figure 41: Interest in debt management tools, April 2015
- Young people’s preferences are strong
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- Figure 42: Interest in debt management tools, by generation, April 2015
- Hispanics have more interest in debt management tools
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- Figure 43: Interest in debt management tools, by Hispanic origin, April 2015
- Use of Credit and Its Impact
- How people decide whether – and how – to use credit
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- Figure 44: Whether debt impacts lives, by demographic factors, April 2015
Appendix – Data Sources and Abbreviations
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- Data sources
- Market data
- Consumer survey data
- Consumer qualitative research
- Direct marketing creative
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – Key Driver Analysis
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- Methodology
Appendix – Consumer Repertoire Analysis
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- Type of debt held
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- Figure 45: Type of secured debt held, by repertoire groups, April 2015
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- Figure 46: Type of unsecured debt held, by repertoire groups, April 2015
- How much debt do they have?
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- Figure 47: Total amount of secured debt, by repertoire group, April 2015
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- Figure 48: Total amount of unsecured debt, by repertoire group, April 2015
- Credit scores
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- Figure 49: Credit scores, by repertoire group, April 2015
- What the debt is for
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- Figure 50: Most recent use of loan, by repertoire group, April 2015
- Debt repayment
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- Figure 51: Have a payment plan, by repertoire group, April 2015
- Attitudes toward credit and debt
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- Figure 52: Attitudes toward credit and debt, by repertoire group, April 2015
- Interest in debt management tools
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- Figure 53: Interest in debt management tools, by repertoire group, April 2015
Appendix – Consumer Tables
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- Source of loans
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- Figure 54: Source of loans, by demographics, November 2013-December 2014
- Loan source: Commercial banks
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- Figure 55: Type of loans from commercial bank, November 2013-December 2014
- Source of Loan: Savings bank/Savings and loan
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- Figure 56: Type of loans from savings bank/savings and loan, November 2013-December 2014
- Source of Loan: Credit union
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- Figure 57: Type of loans from commercial bank, November 2013-December 2014
- Source of Loan: Other
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- Figure 58: Type of loans from other types of firms, November 2013-December 2014
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