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US Unsecured Loans market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Unsecured Loans market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Products covered in this Report

This Report looks at the unsecured loans market in the UK. This includes personal loans and high-cost short-term credit loans including payday loans. It does not cover analysis of business loans, or secured loans, which are typically secured against the borrower’s property (see Mintel’s Secured Loans – UK, February 2016 report).

For the purposes of this report, the following definitions apply: Personal loans are, in the main, available to borrow for between £1,000 and £25,000 (subject to credit checks) over fixed repayment terms of one to 10 years.

High-cost short-term credit loans and payday loans are defined as unsecured loans of value under £1,000 with a repayment term of less than one year.

Peer-to-peer (P2P) loans are personal loans lent through a P2P platform, which matches savers and borrowers to cut out the role of banks in lending money to consumers. P2P loans are typically available from £1,000 up to a value of £25,000.

Expert analysis from a specialist in the field

Written by Sam Marks, a leading analyst in the Financial Services sector, him extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The unsecured loans market has experienced continuing growth over the last five years due to strong consumer confidence and record-low interest rates. However, looking ahead concern over rising levels of household debt has resulted in government intervention which may slow growth in this market. Sam Marks
Research Analyst

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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