Have you given any thought to using a personal loan to make a big purchase or consolidate debt?
It may be helpful to know that as consumers come to understand the many benefits, personal loans are becoming more and more common.
Discover Personal Loans’ 2017 survey recently found that 38% of respondents have taken out a personal loan, and 63% are familiar with the loan option.
According to CNBC, citing recent data from TransUnion, the number of people using an unsecured loan increased approximately 30 percent in recent years, jumping from 10.57 million in 2013 to 13.72 million in 2015.
In addition to the people who have already taken out a personal loan, many others are thinking about doing so in the near future.
A recent Bankrate Money Pulse survey, conducted in January 2016 by Princeton Survey Research Associates International, noted that approximately 24 million consumers, or just about 10 percent of American adults, are “somewhat likely” or “very likely” to take out a personal loan in the next year.
The No. 1 Reason People Use Personal Loans
The Discover survey found that both the youngest and oldest groups surveyed named medical expenses as the most popular potential use of a personal loan.
Just more than a quarter People ages 23-29 and 50-65+ both cited medical expenses as a top use case.
For those 30-39 and 40-49, debt consolidation was the most common way they would likely use the product.
Millennials are Turning to Personal Loans
While adults of all ages can use personal loans for a number of reasons, millennials in particular are interested in what this financial tool can do for them.
Citing the same Bankrate Money Pulse survey, MarketWatch notes that 20% of adults considering a personal loan were between the ages of 18 and 29.
There are a couple of reasons why young adults, such as millennials, are more interested in personal loans than previous generations:
- 25 percent of millennials have no emergency savings, with only 23 percent having saved six months of expenses or more
- They know how to search online for the best deal, steering them more towards personal loans
When you combine a lack of savings with the technology prowess of millennials, it’s easy to see why consumers in this age group are turning their attention to personal loans.
What are the Benefits of Personal Loans?
With so many Americans now using personal loans, it goes without saying that they’re attracted to something.
Respondents to the Discover survey indicated what they saw as the biggest benefits:
These are the types of benefits that make it easier for a consumer to decide in favor of a personal loan.
Among respondents to the Discover survey, 43% said interest rates would be most helpful to know before applying for a personal loan; 16% said repayment terms; and 15% said the monthly payment amount.
While personal loans may not have always been the most familiar choice among the average consumer, that seems to be changing.