Online Lenders

Fintech is driving rising personal debt levels, in 4 charts

  • Fintech is moving millennials from credit cards to personal loans.
  • That's resulted in more, but smaller, loans
close

Email a Friend

Fintech is driving rising personal debt levels, in 4 charts
As fintech companies make it easier to obtain a loan, millennials are definitely the target for many originators. And it's working -- millennials are definitely partaking in the online lending bonanza. Compared to the previous generations, millennials are more likely to take out a personal loan to cover everyday costs, relying less heavily on credit cards as their predecessors, according to data from LendingPoint. For this study, LendingPoint analyzed the loan applications of individuals to whom the company extended personal loans in 2017 and 2018 (a total of 65,626 loans).

Fintech fueling personal loans

It has become easier than ever for consumers to take out a personal loan. Fintech firms have removed a lot of the friction in the loan process, decreasing the time to acquire new customers, and increasing the likelihood of a consumer receiving a loan. Fintech firms originated 36 percent of all personal loans last year, compared to less than 1 percent in 2010. Firms like LendingClub, Prosper, and SoFi are driving the expansion of personal loans. Many upstart personal lenders are hitting record origination levels. personal loan originations hitting records  

Millennials don’t like credit cards

Unlike their parents, millennials tend to shy away from credit card usage in favor of alternative methods of financing. Millennials have fewer credit cards and carry lower balances than the previous generation. This generation carries on average two fewer bankcards and private label cards than Gen X consumers at the same respective ages. millennials shy away from credit cards

Millennials seek more personal loans

Millennials may not like to use credit cards, but that doesn't mean they are averse to using credit. In fact, they prefer to use short term loans to pay for things like weddings and moving costs. Through October 2018, LendingPoint extended loans to more than twice as many millennials than it did in all of 2017.  

More loans, sure, but they're smaller, too

While they may be seeking more loans, millennials are taking out smaller loans. LendingPoint data showed average loan requests are down 8 percent across the board for all ages. This coincides with a significant, almost two-times increase of the number of loans extended year-over-year.   millennials use more, but smaller loans According to LendingPoint data, the firm's average millennial borrower asked for a loan of nearly $12,000. This year, that request dropped down to just under $10,300, a decrease of about 14 percent (by comparison, GenX borrowers — age 38 to 53 — reduced their average loan request only about 6 percent, from about $12,700 to a little less than $12,000, in that same period).

0 comments on “Fintech is driving rising personal debt levels, in 4 charts”

BNPL, Online Lenders

PayPal’s evolving strategy in a crowded BNPL market 

  • We take a look at how PayPal entered the BNPL sector by launching its first BNPL offering – ‘Pay in 4’, and expanded its suite of products by rolling out another BNPL product, ‘Pay Monthly’, in 2022.
  • Steve Mikulcik, VP of Global BNPL at PayPal, talks about the ramifications of such a rapidly-growing industry, and whether it is still serving the purpose of facilitating consumers.
Sara Khairi | January 17, 2023
Online Lenders

5 questions about managing everyday Americans’ finances with Achieve’s Andrew Housser

  • Achieve, formerly known as Freedom Financial Network, offers digital finance solutions like consolidation programs to underserved credit groups.
  • Tearsheet sat down with the co-founder and co-CEO of Achieve, Andrew Housser, to learn about his plans for the company and how it caters to the needs of everyday Americans.
Rabab Ahsan | December 28, 2022
Online Lenders

Does B2B BNPL have the potential to emerge as the next top fintech trend?

  • Is B2B BNPL keeping up to speed with the B2C model?
  • Contrary to B2C, B2B BNPL is viewed more as the automation of existing credit processes with slight innovation. However, the model brings its own set of challenges.
Sara Khairi | October 31, 2022
Member Exclusive, Online Lenders

Lending Briefing: Upgrade CEO Renaud Laplanche on fintech lending in a tight market

  • Today, there's less demand for consumer loans, and lenders are tightening their credit books. The 'cautious approach' narrative prevails in many interviews and conference calls.
  • I sat down with Renaud Laplanche, CEO at Upgrade, one of the main direct-to-consumer fintech lenders in the US. We discussed the macro environment, and how he designed Upgrade's business model in a way that is proving resilient during these turbulent times.
Iulia Ciutina | October 12, 2022
Member Exclusive, Online Lenders

Lending Briefing: Debit cards are taking over

  • This year, debit cards have emerged as the preferred payment method for the majority of US consumers, dethroning credit cards.
  • Younger generations are behind this switch – even though they're also getting credit cards, Millennials and Gen Zers prefer to pay with debit.
Iulia Ciutina | September 28, 2022
More Articles