Personal Loan Market

Personal Loan Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028F

The global personal loan market is anticipated to project robust growth in the forecast period. The increasing economy across the world had a significant rise in demand for has directly impacted the global personal loan industry in a positive way. Growing demand for personal loan among the individuals for debt consolidation loan, credit card refinance loan, home improvement loan, general purchase loan, moving and relocation loan are also significant factors influencing the personal loan industry growth.

Personal loans are closed-end, uncollateralized sources of credit, also referred to as installment loans or consumer loans. This means that they don't require collateral, in contrast to mortgages and some auto loans. They also have fixed payments for a set period, unlike credit cards.

One of the consumer debt products with the fastest growth is personal loans. The outstanding balance on personal loans was $209.6 billion, as of Q3 2022. Personal loan balances have increased annually since 2013 in double digits all but three years (2017, 2020, and 2021). Personal loan balance decreased by almost 3%, in 2020. Positive growth picked up pace in 2021 (5.6%), and by the end of Q3 in 2022, it had exploded (34%). Compared to credit cards, personal loans have lower interest rates: 8.73% as of April 1, 2022. (24-month loans at commercial banks).

The demand for personal loan has also expanded in the Asia Pacific region in the recent years. In the coming decades, Asian consumers are anticipated to make up half of the growth in global consumption, representing a USD10 trillion growth opportunity. One in two households with incomes above the upper middle class are predicted to exist in Asia, and one in two completed consumer transactions are likely to take place there. Furthermore, the growing population of these countries constantly need loans to raise their standard of living, for which consumers are highly dependent on personal loans. Developing economies like India, Malaysia, Bangladesh, China, and South Korea also present significant opportunities for personal loan companies to expand their offerings. Therefore, the demand for personal loan is anticipated to be broadly steady, over time.

Lenders initially tightened their loan requirements in response to the COVID-19's economic uncertainty and began concentrating their underwriting efforts on verifying borrowers' employment and income. Lenders, however, made a turn for the better in late 2020s, lowering their standards in an effort to draw-in new borrowers. In late 2020 and early 2021, lenders focused primarily on borrowers with lower credit scores; according to TransUnion, loan originations from subprime borrowers increased 71% in the first quarter of 2021. The hardest hit by 2022's record-breaking inflation were consumers with poor credit and tight budgets, which increased the delinquency rates for personal loans.

Rising Presence of FinTech Lenders Aiding the Market Growth

A Fintech lender is an online lender that relies on financial technology for its underwriting, risk analysis, funding, and marketing. Nowadays, most lenders, including conventional banks and credit unions, fit this description. However, the phrase is typically used to describe start-ups and relatively new businesses that only operate online and make use of new credit models along with alternative data sources. Technology has been instrumental in the rapid expansion of unsecured personal loans. Lenders now have access to a wealth of financial information as well as tools for credit scoring, which can aid them in making better lending decisions. Applied statistics are increasingly being used to inform decisions, rather than solely relying on human judgement. This expedites, lowers the cost, and ensures the viability of underwriting unsecured personal loans. In the foreseeable future, it is anticipated that this tendency will persist. Moreover, customers reliance towards digital platform has also increased over the past few years.

Ease of Availing Personal Loans is Fueling the Market

A significant factor affecting the market's growth is the accelerating demand by reducing availing norms for these Personal Loan. In comparison to other loans like home loans and gold loans, which requires a lot of paperwork, personal loans have fewer requirements and a quicker approval process. A personal loan online will typically be disbursed through financial institutions within a few hours, subject to if the lender is confident in an individual’s ability to repay the loan. Another significant advantage of choosing personal loan providers is the freedom to choose the term of loan.

Excessive Fees and Penalties are Hindering the Market Growth

The issue of recovering loan majorly hinders the market of personal loan. As a result, various personal loan providers are frequently involved in applying excessive fees and penalties to the loan, further increasing the cost of borrowing. Origination fees for some loans range from 1% to 6% of the loan amount. Either the fees is incorporated into the loan or taken out of the money given to the borrowers. In addition, many lenders impose prepayment fees if the borrower settles the balance prior to loan term end. Additionally, consumers develop a mistrust of lenders when they ignore the fine print of terms, such as fees and penalties, before applying for a personal loan. As a result, this is one significant factor preventing the personal loans market from expanding.

Market Segmentation

The global personal loan market is segmented based on Purpose, End User, interest rate, tenure, region, and competitional landscape. Based on Purpose, the market is further fragmented into Debt Consolidation Loan, Credit Card Refinance Loan, Home Improvement Loan, General Purchase Loan, Moving and Relocation Loan, and Others (Medical Expenses Loan, Wedding Loan, Vacation Loan, Car Repair Loan, etc.). Based on End User, the market is categorized into Employed Individuals, Professionals, Students, Entrepreneur, Others (Homemaker, Unemployed, Retired, etc.). Based on tenure, the market is segmented into Less than 2 years, 2 years to 4 Years, More than 4 Years. The market analysis also studies the regional segmentation, which is divided among North America, Europe, Asia-Pacific, Middle East & Africa, and South America.

Company Profiles

Avant, LLC, Goldman Sachs (Marcus), Wells Fargo & Co., Barclays PLC, DBS Bank Ltd, JPMorgan Chase & Co., American Express Company, Citigroup, Inc., Truist Financial Corporation, Social Finance, Inc., LendingClub Bank are among the major market players in the global platform that lead the market growth of the global personal loan market.

Report Scope:

In this report, the global Personal Loan market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Global Personal Loan Market, By Purpose:
• Debt Consolidation Loan
• Credit Card Refinance Loan
• Home Improvement Loan
• General Purchase Loan
• Moving and Relocation Loan
• Others
• Global Personal Loan Market, By End User:
• Employed Individuals
• Professionals
• Students
• Entrepreneur
• Others
• Global Personal Loan Market, By Tenure:
• Less than 2 Years
• 2 Years to 4 Years
• More than 4 Years
• Global Personal Loan Market, By Region:
• North America
• United States
• Canada
• Mexico
• Europe
• United Kingdom
• Germany
• Italy
• France
• Spain
• Asia-Pacific
• China
• India
• Japan
• South Korea
• Australia
• Middle East & Africa
• UAE
• South Africa
• Turkey
• Saudi Arabia
• South America
• Brazil
• Argentina
• Colombia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the global Personal Loan market.

Available Customizations:

With the given market data, TechSci Research offers customizations according to a company’s specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).

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