Personal Loans - US - November 2019

OVERVIEW
What you need to know
Definition
EXECUTIVE SUMMARY 
Market overview
Key Takeaways
Of all the reasons people take out personal loans, refinancing other debt is the most popular
Figure 1: Reason for personal loan, September 2019
It’s the rates!
Figure 2: most important factors when choosing a personal loan, September 2019
Credit card companies are fighting a war on two fronts
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
Consumer debt > $4 trillion
Credit card, auto loan delinquencies on rise, student loans remain problematic
MARKET SIZE
Consumer debt continues climbing to new heights
Figure 4: Total US non-housing consumer debt, by type, Q2 2003-Q2 2019
Credit card and auto loans have rebounded since the recession
Figure 5: Number of credit card & auto loan accounts, Q2 2003 – Q2 2019
MARKET PERSPECTIVE
90+ day delinquencies provide mixed signals
Figure 6: Percent of balance 90+ days delinquent, by debt type, Q2 2003 – Q2 2019
Card issuers have welcomed spending
Figure 7: Credit card balance, total limit, and available limit, Q2 2003 - Q2 2019
KEY PLAYERS – WHAT YOU NEED TO KNOW 
New products blur lines between loans and credit cards
Poor financial decision-making shouldn’t be enabled
Rise of the microlender
WHAT’S HAPPENING
Personal loan direct mail has a familiar cast of characters
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
Figure 9: Citi Flex Loan offer, September 2019
American Express – Pay it Plan it
Figure 10: American Express Special offer, hilton , February 2019
Incentivizing loans with gift cards
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
Debt is fundamentally altering consumer attitude and behavior
Figure 15: Attitudes toward debt, by education level, April 2019
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?
Figure 17: Earnest Homepage, November 2019
WHAT TO WATCH
Microlending is quickly becoming a viable credit card alternative
Figure 18: Attitudes toward personal loan attributes, by age, September 2019
Klarna
Figure 19: Klarna Homepage, November 2019
Fintech will extend credit to new segments
Figure 20: Attitudes toward Fintech, credit, and society, by generation, August 2019
THE CONSUMER – WHAT YOU NEED TO KNOW 
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
Credit cards are the most common source of consumer debt
Figure 21: Most popular types of consumer debt, September 2019
Who has personal loans? (In brief: Millennials)
Figure 22: Personal loan ownership, by generation, September 2019
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)
Figure 24: Source of personal loan, September 2019
REASON FOR PERSONAL LOAN
Refinancing other debt is the top personal loan use case
Figure 25: Reason for personal loan, September 2019
Men and women open loans for (slightly) different reasons
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
Figure 28: TURF Analysis – Purpose of loan, September 2019
Figure 29: Table - TURF Analysis – Purpose of loan, September 2019
Methodology
FACTORS IN CHOOSING LENDER
Rates reign supreme
Figure 30: most important factors when choosing a personal loan, September 2019
After rates, reputation is on the line
Figure 31: personal loan application factors, by highest-ranked responses, September 2019
Figure 32: Attitudes toward personal loan attributes, by age, September 2019
For young borrowers, personal recommendations carry weight
Figure 33: Importance of interest rate and personal recommendation, by age, September 2019
INTEREST IN LOAN PRODUCTS
About one in 10 consumers are interested in a personal loan
Figure 34: Interest in various loan products, September 2019
Interest in lending products decreases with age
Figure 35: Interest in any loan products, September 2019
CHAID analysis – ideal loan consumer
Figure 36: Interest in loan products – CHAID – Tree output, September 2019
Figure 37: Interest in loan products – CHAID – Table output, September 2019
Methodology
ATTITUDES & BEHAVIORS TOWARD LENDING
Personal loans aren’t necessarily solving the underlying issues
Figure 38: Financial attributes of personal loan borrowers, September 2019
Debt makes consumers uncomfortable; Millennials are more resigned to it
Figure 39: Attitudes toward debt, by generation September 2019
Millennials are the target audience for personal loans
Figure 40: Attitudes toward personal loan, by generation September 2019
APPENDIX – DATA SOURCES AND ABBREVIATIONS
Data sources
Consumer survey data
Direct marketing creative
Abbreviations and terms
Abbreviations