Table of Contents
Executive Summary
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- Market overview
- Key Takeaways
- Of all the reasons people take out personal loans, refinancing other debt is the most popular
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- Figure 1: Reason for personal loan, September 2019
- It’s the rates!
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- Figure 2: most important factors when choosing a personal loan, September 2019
- Credit card companies are fighting a war on two fronts
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- Figure 3: Attitudes toward personal loan attributes, by age, September 2019
- What it means and what’s next
The Market – What You Need to Know
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- Consumer debt > $4 trillion
- Credit card, auto loan delinquencies on rise, student loans remain problematic
Market Size
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- Consumer debt continues climbing to new heights
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- Figure 4: Total US non-housing consumer debt, by type, Q2 2003-Q2 2019
- Credit card and auto loans have rebounded since the recession
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- Figure 5: Number of credit card & auto loan accounts, Q2 2003 – Q2 2019
Market Perspective
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- 90+ day delinquencies provide mixed signals
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- Figure 6: Percent of balance 90+ days delinquent, by debt type, Q2 2003 – Q2 2019
- Card issuers have welcomed spending
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- Figure 7: Credit card balance, total limit, and available limit, Q2 2003 - Q2 2019
Key Players – What You Need to Know
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- New products blur lines between loans and credit cards
- Poor financial decision-making shouldn’t be enabled
- Rise of the microlender
What’s Happening
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- Personal loan direct mail has a familiar cast of characters
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- Figure 8: Direct Mail Volume: Top Ten Personal Lending Mailers, June 2017 - June 2019
- Traditional brands establish themselves in personal loans space, blur lines between cards and lending
- Citibank – Citi Flex Loan
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- Figure 9: Citi Flex Loan offer, September 2019
- American Express – Pay it Plan it
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- Figure 10: American Express Special offer, hilton , February 2019
- Incentivizing loans with gift cards
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- Figure 11: Upstart personal loan offer, October 2019
- Figure 12: Citizens Bank personal loan offer, October 2019
- Figure 13: Payoff personal loan offer, September 2018
- Figure 14: Best Egg personal loan offer, June 2019
What’s Struggling
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- Debt is fundamentally altering consumer attitude and behavior
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- Figure 15: Attitudes toward debt, by education level, April 2019
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- Figure 16: How extra money is spent – Paying off debt, by age, February 2019
- The underlying reason people need these loans, and the ensuing bubble?
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- Figure 17: Earnest Homepage, November 2019
What to Watch
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- Microlending is quickly becoming a viable credit card alternative
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- Figure 18: Attitudes toward personal loan attributes, by age, September 2019
- Klarna
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- Figure 19: Klarna Homepage, November 2019
- Fintech will extend credit to new segments
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- Figure 20: Attitudes toward Fintech, credit, and society, by generation, August 2019
The Consumer – What You Need to Know
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- More than one in 10 consumers have a personal loan
- Most are borrowing to refinance other debt
- Rates are all the rage
- Loans are a young person’s game
- Personal loans can’t solve the systemic issues
Types of Debt
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- Credit cards are the most common source of consumer debt
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- Figure 21: Most popular types of consumer debt, September 2019
- Who has personal loans? (In brief: Millennials)
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- Figure 22: Personal loan ownership, by generation, September 2019
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- Figure 23: Personal loan vs line of credit ownership, by household income, September 2019
- Where are they obtaining their loans? (Banks, and a bevy of other players)
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- Figure 24: Source of personal loan, September 2019
Reason for Personal Loan
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- Refinancing other debt is the top personal loan use case
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- Figure 25: Reason for personal loan, September 2019
- Men and women open loans for (slightly) different reasons
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- Figure 26: Gender differences in reason for opening a personal loan, September 2019
- Figure 27: Fiona personal loan offer, November 2019
- TURF Analysis – how to market personal loans
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- Figure 28: TURF Analysis – Purpose of loan, September 2019
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- Figure 29: Table - TURF Analysis – Purpose of loan, September 2019
- Methodology
Factors in Choosing Lender
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- Rates reign supreme
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- Figure 30: most important factors when choosing a personal loan, September 2019
- After rates, reputation is on the line
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- Figure 31: personal loan application factors, by highest-ranked responses, September 2019
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- Figure 32: Attitudes toward personal loan attributes, by age, September 2019
- For young borrowers, personal recommendations carry weight
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- Figure 33: Importance of interest rate and personal recommendation, by age, September 2019
Interest in Loan Products
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- About one in 10 consumers are interested in a personal loan
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- Figure 34: Interest in various loan products, September 2019
- Interest in lending products decreases with age
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- Figure 35: Interest in any loan products, September 2019
- CHAID analysis – ideal loan consumer
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- Figure 36: Interest in loan products – CHAID – Tree output, September 2019
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- Figure 37: Interest in loan products – CHAID – Table output, September 2019
- Methodology
Attitudes & Behaviors toward Lending
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- Personal loans aren’t necessarily solving the underlying issues
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- Figure 38: Financial attributes of personal loan borrowers, September 2019
- Debt makes consumers uncomfortable; Millennials are more resigned to it
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- Figure 39: Attitudes toward debt, by generation September 2019
- Millennials are the target audience for personal loans
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- Figure 40: Attitudes toward personal loan, by generation September 2019
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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