Personal Loans Hit a New Record, Driven by Online Lending Platforms
According to new data from TransUnion, which was reported in a Bloomberg story, personal loans have hit record highs in 2018 and are now the fastest-growing U.S. consumer lending category. The rising usage of personal loans, according to the piece, is driven by online lending platforms like LendingClub, Prosper, and SoFi.
Outstanding balances rose about 18 percent in the first quarter to $120 billion, and FinTech companies originated 36 percent of total personal loans in 2017, a sharp rise from less than 1 percent in 2010, according to TransUnion.
“A lot of credit goes to the FinTech leaders for reinvigorating a loan category that has been around forever,” Jason Laky, TransUnion’s consumer lending business lead, told Bloomberg in an interview.
“If you think about ‘It’s a Wonderful Life,’ George Bailey and his bank offered personal loans to the consumers,” he said. “It’s a core banking product that’s been around since the beginning of banking.”
Traditional banks, too, are seeing rises in the lending category. The Bloomberg story reports that Don Fandetti, an analyst at Wells Fargo, said many consumers are using personal loans to consolidate debt and make large one-time purchases, instead of using home equity.
Many established banks have also created their own online platforms to gain marketshare, like SunTrust’s LightStream and Goldman Sachs’ Marcus.