Personal Loans Continue Growing at Incredible Rate
Over the past decade, the personal loan industry has grown from a fledgling, high-risk business to a booming space filled with a multitude of lenders and prime borrowers. This industry has become increasingly popular because of its relatively low cost and applications among consumers, which are numerous. 24/7 Wall St. took a look into the personal loan industry in LendEDU’s most recent report.
According to the most recent consumer data from TransUnion, the national personal loan debt stood at $107 billion in the second quarter of 2017, representing 10.8% increase from the same quarter last year, and a 132.0% increase from 2012.
In this time, consumers taking out these personal loans noted an average FICO credit score of 741, which scores as “good,” or in the second highest credit score category. The average credit score of U.S. residents is 687.
At the same time, approvals for personal loans are fairly low. LendEDU’s data showed only a 23.88% approval rating for all applicants, while 76.12% were being denied a personal loan.
Although many tend to lump personal loans into the same category as payday loans, this is not the case. In reality, personal loans are an entirely different type of financial product that are often distributed to prime or prime plus borrowers, as opposed to easily approved loans with outrageous interest rates meant for low-income consumers.
One of the more interesting findings from this report was that only 34.86% of approved personal loan applicants go on to accept the loan.
LendEDU concluded the report saying:
LendEDU’s data found that the average personal loan size was $21,644. This is a considerable sum of money to be lent, especially when one considers that personal loans are often compared to a line of credit issued via credit card.
Experian found that the average credit card limit was $8,071, considerably less than the average personal loan size. But, after remembering that the average approved personal loan applicant has a credit score of 741, personal loan lenders can be justified for distributing such large loans.
Finally, if a consumer is in a serious monetary bind and is relying on a personal loan to loosen the knot, they will certainly not grow impatient with personal loan funding. Our data found that it took an average of 6.25 days after being approved to receive personal loan funds. Quite a quick turnaround!