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Unsecured Loans - US - March 2017

"The US economy remains relatively strong and many consumers are confident about their personal finances. However, relatively few plan to take on any additional unsecured debt in the next year, meaning lenders will have to fight for customers."

- Robyn Kaiserman, Senior Financial Services Analyst

This report is looking at the following areas:

  • Unsecured debt is still climbing
  • Few believe they use debt responsibly
  • Peer-to-peer lenders need to educate consumers

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

          • The issues
            • Unsecured debt is still climbing
              • Figure 1: Student loan and credit card debt, Q3 2011-Q3 2016
            • Few believe they use debt responsibly
              • Figure 2: Loan behavior, by generation, December 2016
            • Peer-to-peer lenders need to educate consumers
              • Figure 3: Attitudes toward borrowing, by gender, December 2016
            • The opportunities
              • Cross-selling Millennials
                • Figure 4: Loan behaviors, by generation, December 2016
              • Millennials are optimistic that their finances will improve
                • Figure 5: Attitudes toward borrowing, by generation, December 2016
              • Lenders should leverage existing customer relationships
                • Figure 6: Factors affecting lender decision, by type of loan, December 2016
              • What it means
              • The Market – What You Need to Know

                • Consumers still have appetite for debt
                  • Total delinquencies are down
                    • Credit card debt situation is improving
                      • Student loans
                        • Positive economic indicators continue
                        • Market Size

                          • Total consumer debt is still climbing
                            • Figure 7: Total US consumer debt Q3 2011-Q3 2016
                        • Market Breakdown

                          • Total delinquencies are down
                            • Figure 8: 90-day delinquency rates, all loans, Q3 2011-Q3 2016
                          • Credit card debt situation is improving
                            • Figure 9: Credit card data, Q3 2011-Q3 2016
                          • General purpose credit cards are growing faster than private label
                            • Credit card delinquency rates continue to fall
                              • Figure 10: Credit card 90-day delinquency rates, Q3 2011-Q3 2016
                            • Student loans
                              • Figure 11: Student loan debt, Q3 2011-Q3 2016
                          • Market Factors

                            • Low unemployment
                              • Figure 12: Unemployment rate, December 2010-December 2016
                            • Income continues to rise
                              • Figure 13: US mean and median income, 2005-15
                            • Disposable income is trending up
                              • Figure 14: Disposable income, January 2015-December 2016
                          • Key Players – What You Need to Know

                            • Credit inquiries are down from their peak, but rising this year
                              • P2P loans are not really catching on
                                • Marcus – by Goldman Sachs
                                  • Alternative lenders are branching out
                                    • Alternative credit scoring
                                      • AI in lending?
                                      • What’s Working?

                                        • Credit inquiries are down from their peak, but rising this year
                                          • Figure 15: Number of credit inquiries in past six months, Q3 2011-Q3 2016
                                      • What’s Struggling?

                                        • P2P loans are not really catching on
                                          • Figure 16: Have P2P loan, by generation, December 2016
                                        • Lenders may find it hard to attract customers
                                          • Figure 17: Attitudes toward borrowing, December 2016
                                      • What’s Next?

                                        • Marcus – by Goldman Sachs
                                          • Figure 18: Marcus direct mail ad
                                        • Alternative lenders are expanding their offerings
                                          • Lending Club
                                            • Prosper
                                              • SoFi
                                                • Figure 19: SoFi incentive email ad, 2016
                                                • Figure 20: SoFi online ad, 2016
                                                • Figure 21: SoFi relationship ad, 2016
                                              • Alternative credit scoring
                                                • Artificial intelligence in lending?
                                                • The Consumer – What You Need to Know

                                                  • Young men may need help with their debt
                                                    • Unsecured debt used by Blacks more than by Whites
                                                      • Borrowing needs change with age
                                                        • Family and friends are influential in lender choice
                                                          • Online ads reach Hispanics
                                                            • Interest rate is most important to everyone
                                                              • Young people want to apply online
                                                                • Higher balances are not interfering with payments
                                                                  • Millennials go to a branch to apply for a loan
                                                                    • Men are more comfortable with debt and trust banks more than P2P lenders
                                                                    • Type of Loan Held

                                                                      • Young men use more types of unsecured loans
                                                                        • Figure 22: Type of loan held, by gender and age, December 2016
                                                                      • Blacks more likely than Whites to have unsecured debt
                                                                        • Figure 23: Type of loan held, by Hispanic origin and race, December 2016
                                                                      • Borrowing needs change with age
                                                                        • Figure 24: Type of loan held, by generation, December 2016
                                                                    • Purpose of Loan

                                                                      • Most borrow for education
                                                                        • Figure 25: Purpose of loan, December 2016
                                                                      • Young women borrow for their education, young men for their homes
                                                                        • Figure 26: Purpose of loan, by gender and age, December 2016
                                                                    • Source of Information About Lender

                                                                      • Family and friends are influential in lender choice
                                                                        • Figure 27: Source of information, by type of loan, December 2016
                                                                      • Men are easier to reach
                                                                        • Figure 28: Source of information, by gender, December 2016
                                                                      • Hispanics are easier to reach with online ads
                                                                        • Figure 29: Media channel, by Hispanic origin, December 2016
                                                                    • Plans for Future Unsecured Debt

                                                                      • Young men plan to apply for credit cards
                                                                        • Figure 30: Plans for future unsecured debt, by gender and age, December 2016
                                                                      • Parents have plans for more credit cards
                                                                        • Figure 31: Plans for future unsecured debt, by presence of children in household, December 2016
                                                                    • Factors Affecting Lender Decision

                                                                      • Overall, interest rate is most important
                                                                        • Figure 32: Factors affecting lender decision, December 2016
                                                                        • Figure 33: Discover loan email ad, 2017
                                                                      • Consumers look for different features in different types of loans
                                                                        • Figure 34: Factors affecting lender decision, by type of loan, December 2016
                                                                      • Ability to apply online is important to young people
                                                                        • Figure 35: Factors affecting lender decision, by generation, December 2016
                                                                      • Blacks want easy approval and speed of funding
                                                                        • Figure 36: Factors affecting lender decision, by race, December 2016
                                                                        • Figure 37: Zippyloan email ad, 2017
                                                                    • Loan Behaviors

                                                                      • Paying on time is hardest for young men
                                                                        • Figure 38: Loan behaviors, by gender and age, December 2016
                                                                      • Higher balances are not interfering with payments
                                                                        • Figure 39: Loan behaviors, by generation, December 2016
                                                                      • Millennials more likely than others to visit a branch
                                                                        • Figure 40: Loan behaviors, by generation, December 2016
                                                                    • Attitudes Toward Borrowing

                                                                      • Consumers are uncomfortable with borrowing
                                                                        • Figure 41: Attitudes toward borrowing, December 2016
                                                                      • Many men are comfortable with debt and trust banks more than P2P lenders
                                                                        • Figure 42: Attitudes toward borrowing, by gender, December 2016
                                                                      • Young people are optimistic – but still not comfortable with debt
                                                                        • Figure 43: Attitudes toward borrowing, by gender and age, December 2016
                                                                      • Hispanic Millennials use credit cards for rewards
                                                                        • Figure 44: Attitudes toward borrowing, by Hispanic origin and generation, December 2016
                                                                    • Appendix – CHAID Analysis

                                                                        • Men with mid-range credit scores most likely to be comfortable with unsecured debt
                                                                          • Figure 45: Comfort with use unsecured debt – CHAID analysis – December 2016
                                                                      • Appendix – Data Sources and Abbreviations

                                                                        • Data sources
                                                                          • Sales data
                                                                            • Consumer survey data
                                                                              • Direct marketing creative
                                                                                • Abbreviations and terms
                                                                                  • Abbreviations
                                                                                    • Terms
                                                                                    • Appendix – Key Players

                                                                                      • Lending Club

                                                                                      Unsecured Loans - US - March 2017

                                                                                      US $3,995.00 (Excl.Tax)