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Consumer Attitudes toward Debt - US - July 2015

Consumers have begun to borrow again and banks have begun to lend. This is likely to continue as the economy strengthens, unemployment continues to decline, and interest rates stay low. As loan demand grows, however, the industry is facing disruption by P2P (peer-to-peer) lenders that match borrowers and investors, cutting out the bank in the process. While these new lenders currently have a very small percentage of the market, their growth has been extraordinary over a very short time, and the online nature of their business makes them appealing to Millennials and iGen and a future challenge to traditional lenders.

This report looks at the following areas:

  • Consumers are uncomfortable with the amount of debt they are carrying
  • Peer-to-peer lending is disrupting the industry
  • Most people don’t have a solid plan to repay their loans

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Table of contents

  1. Overview

    • What you need to know
      • Definitions
      • Executive Summary

        • The issues
          • Consumers are uncomfortable with the amount of debt they are carrying
            • Figure 1: Attitudes toward debt, by generation, April 2015
          • Peer-to-peer lending is disrupting the industry
            • Most people don’t have a solid plan to repay their loans
              • Figure 2: Have a repayment plan, April 2015
            • The opportunities
              • Simplify the lending experience
                • Figure 3: QuickenLoan “Simplicity” mortgage email, 2015
              • Online and mobile debt management tools
                • Figure 4: Interest in debt management tools, April 2015
              • Increased comfort level with debt
                • Figure 5: Attitudes toward credit and debt, by generation, April 2015
              • Consumers with imperfect credit scores
                • Figure 6: Credit score, by attitudes toward credit and debt, April 2015
              • What it means
              • The Market – What You Need to Know

                • Consumer debt is inching up again
                  • Less demand for loans
                    • Credit card balances are lower
                      • The economy is strengthening
                      • Market Size

                        • Total amount of consumer debt
                          • Figure 7: Total consumer debt, Q1 2003-Q1 2015
                        • Loan demand is still increasing, but at a slower rate
                          • Figure 8: Number of loan inquiries, number of loans opened and closed within past 12 months, Q1 2010-Q1 2015
                      • Market Breakdown

                        • Total debt is inching up again – but components are changing
                          • Figure 9: Components of US consumer debt, Q1 2010-Q1 2015
                        • Mortgage debt still the largest portion of total consumer debt
                          • Figure 10: Total US mortgage debt, Q1 2003-Q1 2015
                        • Credit card debt is declining
                          • Figure 11: US credit card debt, Q1 2003-Q1 2015
                        • Auto loans are slowly growing
                          • Figure 12: US auto loan debt, Q1 2003-Q1 2015
                        • Student loan debt reaching new highs
                          • Figure 13: Total US student loan debt, Q1 2003-Q1 2015
                        • Delinquency Rates
                          • Figure 14: Percentage of balances that are 90+ days delinquent, by loan type, Q1 2005-Q1 2015
                      • Market Perspective

                        • A drop in the number of those with large loan balances
                          • Figure 15: Change in secured and unsecured loan balances, April 2014 vs April 2015
                      • Market Factors

                        • The economy is getting back on track
                          • Figure 16: Quarterly change in GDP growth, Q1 2010-Q1 2015
                        • New car sales are expected to increase, although at a slower rate
                          • Figure 17: Total US unit sales and forecast of new cars, 2009-19
                        • Personal disposable income and personal consumption expenditures are increasing
                          • Figure 18: Real disposable income and real personal consumption expenditures, 2000-14
                      • Key Players – What You Need to Know

                        • Peer-to-peer lending is increasingly becoming a force
                          • Most have no clear plan to repay their debt
                            • Goldman Sachs is entering the consumer loan market
                            • What’s Working?

                              • Peer-to-peer lending is growing…and changing
                                • LendingClub
                                  • Prosper
                                  • What’s Struggling?

                                    • Consumers are bothered by their debt, but have no repayment plan
                                      • Figure 19: Whether debt has an impact on lives and repayment plans, April 2015
                                  • What’s Next?

                                    • Goldman Sachs is entering the personal lending market
                                    • The Consumer – What You Need to Know

                                      • Most consumers have secured debt
                                        • Unsecured debt most popular among Millennials
                                          • Most don’t have a plan to repay debt
                                            • Debt’s impact on lives
                                              • Desire for online and/or mobile debt management tools
                                              • Debt – What Kind and How Much?

                                                • Secured debt balances are more than $100K
                                                  • Figure 20: Type of secured debt held, by generation, April 2015
                                                • Most popular types of unsecured debt – and who holds it
                                                  • Figure 21: Type of unsecured debt held, by generation, April 2015
                                                  • Figure 22: Discover and Wells Fargo student loan email ads, 2015
                                                • Blacks and Hispanics have more unsecured debt
                                                  • Figure 23: Ownership of secured and unsecured debt, by Hispanic origin and race, April 2015
                                                • Millennials are most likely to be taking on more debt
                                                  • Figure 24: Percentage with more debt than two years ago, by generation, April 2015
                                              • Credit Scores Still Matter

                                                • Gender and age affect credit scores
                                                  • Figure 25: Credit scores, by gender and age, April 2015
                                                • Hispanics and Blacks tend to have lowest scores
                                                  • Figure 26: Credit scores, by Hispanic origin and race, April 2015
                                                • Age, education, and income are primary drivers of high credit scores
                                                  • Figure 27: Key drivers of credit score of 720 or above, April 2015
                                              • What the Debt is For

                                                • Auto loans are most popular
                                                  • Figure 28: Most recent use of loan, by age, April 2015
                                                • Hispanics are more likely to have recently taken loans
                                                  • Figure 29: Most recent use of loan, by Hispanic origin, April 2015
                                                • Acceptable uses of credit
                                                  • Unacceptable uses of credit
                                                  • Attitudes toward Credit and Debt

                                                    • Men feel more positively toward debt
                                                      • Figure 30: Attitudes toward debt, by gender, April 2015
                                                    • Is debt necessary in today’s world?
                                                      • Debt affects iGen and Millennials the most
                                                        • Figure 31: Attitudes toward debt, by generation, April 2015
                                                      • Those with low credit scores are comfortable with debt, too
                                                        • Figure 32: Attitudes toward debt, by credit score, April 2015
                                                        • Figure 33: Milestone and First Premier subprime credit card email ads, 2015
                                                      • Many Hispanics are worried about their debt
                                                        • Figure 34: Attitudes toward debt, by Hispanic origin, April 2015
                                                      • Not everyone thinks debt is a good idea
                                                        • Figure 35: Capital One direct mail ad, Citibank direct mail ad, 2015
                                                        • Figure 36: Attitudes toward debt, by gender and age, and Hispanic origin, April 2015
                                                      • What credit means to consumers
                                                      • Debt Repayment is Not Planned

                                                        • Most don’t have a repayment plan
                                                          • Figure 37: Have a repayment plan, April 2015
                                                        • Parents are more likely to have a plan
                                                          • Figure 38: Have a repayment plan, by parental status, April 2015
                                                      • How People Pay Off Debt

                                                        • Millennials are most likely to only pay the minimum due
                                                          • Figure 39: Debt repayment practices, by generation, April 2015
                                                        • Parents adjust their spending to pay down debt
                                                          • Figure 40: Debt repayment practices, by parental status, April 2015
                                                      • Debt Management Tools

                                                        • Not many want help – but if they do, they want online help
                                                          • Figure 41: Interest in debt management tools, April 2015
                                                        • Young people’s preferences are strong
                                                          • Figure 42: Interest in debt management tools, by generation, April 2015
                                                        • Hispanics have more interest in debt management tools
                                                          • Figure 43: Interest in debt management tools, by Hispanic origin, April 2015
                                                        • Use of Credit and Its Impact
                                                          • How people decide whether – and how – to use credit
                                                              • Figure 44: Whether debt impacts lives, by demographic factors, April 2015
                                                          • Appendix – Data Sources and Abbreviations

                                                            • Data sources
                                                              • Market data
                                                                • Consumer survey data
                                                                  • Consumer qualitative research
                                                                    • Direct marketing creative
                                                                      • Abbreviations and terms
                                                                        • Abbreviations
                                                                          • Terms
                                                                          • Appendix – Key Driver Analysis

                                                                            • Methodology
                                                                            • Appendix – Consumer Repertoire Analysis

                                                                              • Type of debt held
                                                                                • Figure 45: Type of secured debt held, by repertoire groups, April 2015
                                                                                • Figure 46: Type of unsecured debt held, by repertoire groups, April 2015
                                                                              • How much debt do they have?
                                                                                • Figure 47: Total amount of secured debt, by repertoire group, April 2015
                                                                                • Figure 48: Total amount of unsecured debt, by repertoire group, April 2015
                                                                              • Credit scores
                                                                                • Figure 49: Credit scores, by repertoire group, April 2015
                                                                              • What the debt is for
                                                                                • Figure 50: Most recent use of loan, by repertoire group, April 2015
                                                                              • Debt repayment
                                                                                • Figure 51: Have a payment plan, by repertoire group, April 2015
                                                                              • Attitudes toward credit and debt
                                                                                • Figure 52: Attitudes toward credit and debt, by repertoire group, April 2015
                                                                              • Interest in debt management tools
                                                                                • Figure 53: Interest in debt management tools, by repertoire group, April 2015
                                                                            • Appendix – Consumer Tables

                                                                              • Source of loans
                                                                                • Figure 54: Source of loans, by demographics, November 2013-December 2014
                                                                              • Loan source: Commercial banks
                                                                                • Figure 55: Type of loans from commercial bank, November 2013-December 2014
                                                                              • Source of Loan: Savings bank/Savings and loan
                                                                                • Figure 56: Type of loans from savings bank/savings and loan, November 2013-December 2014
                                                                              • Source of Loan: Credit union
                                                                                • Figure 57: Type of loans from commercial bank, November 2013-December 2014
                                                                              • Source of Loan: Other
                                                                                • Figure 58: Type of loans from other types of firms, November 2013-December 2014

                                                                            Companies Covered

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                                                                            Consumer Attitudes toward Debt - US - July 2015

                                                                            US $3,995.00 (Excl.Tax)