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Unsecured Loans - US - March 2017

Published By :

Mintel

Published Date : Mar 2017

Category :

Banking

No. of Pages : N/A

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.

Table of Content

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

List of Table

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