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Experian Data Shows Personal Loan Debt Continues to Grow

There are currently 36.8 million outstanding personal loan accounts held by 10.8% of adults in the United States, according to Experian data from the fourth quarter of 2018.

The number of existing personal loans increased by 16% in the fourth quarter of 2018 compared with 2017, and increased by 42% compared with the fourth quarter of 2015. Personal loans are a form of secured or unsecured credit that can be used to consolidate debt or finance large purchases.

Personal Loans Continue to Be Fastest-Growing Debt

Personal loans are the fastest-growing type of consumer debt in the past year, according to data from Experian. Existing personal loan debt hit $291 billion in the fourth quarter of 2018, an 11.9% increase from the same quarter in 2017. That percentage growth rate is double that of credit cards (5.9%). Personal loan debt is also growing faster than auto, mortgage and student loan debt.


An Overview of Personal Loans in the U.S.

In the past, personal loans were often considered the last option for people trying to escape debt, but that sentiment has changed over the years. The change of heart may be due to the fact that Americans are feeling confident about a steady economy amid historically low unemployment rates. The surge in popularity of personal loans may also be attributed to the rise of online lenders and the boom of financial technology. Several startups have contributed to the growth and now account for more than 40% of all new personal loan originations, according to Experian data.

Experian reviewed data on personal loan trends nationwide. The following information represents both unsecured and secured personal loan debt.

A snapshot of personal loans in the U.S. for the fourth quarter of 2018:

Average Personal Loan Balance:$15,143
Average Monthly Payment:$353
Average annual percentage rate (APR):9.37%
Number of Outstanding Personal Loan Accounts:36.8 million
New Personal Loan Accounts:6.1 million
Number of Consumers with a Personal Loan:34.3 million
Existing Personal Loan Debt:$291 billion

Washington State Has Highest Average Personal Loan Balances Among States

Washington state had the highest average personal loan balance of $27,295 in the fourth quarter of 2018. South Dakota ranked second with an average balance of $26,597, followed by Oregon with an average balance of $26,527. North Dakota had an average balance of $26,281, while Montana followed with an average balance of $24,725.

Among metropolitan statistical areas (MSAs), the San Luis Obispo-Paso Robles, California, market had the highest average personal loan balance of $46,164 in 2018.

New Mexico had the highest number of personal loans per person at 1.7. Louisiana, Oklahoma and Texas all averaged 1.6 personal loans per person, while North Dakota averaged 1.5 personal loans per person.

Hawaii Claims Lowest Average Personal Loan Balance Among States

Hawaii held the lowest average personal loan balance of $12,638 in 2018. District of Columbia ranked second with an average balance of $13,261, followed by Kentucky with an average balance of $13,817, Illinois with $13,895, and Georgia with an average balance of $13,896.

Among MSAs, the Brownsville-Harlingen, Texas, market had the lowest personal loan balance of $7,580 in 2018.


Highest Personal Loan Balance Averages More Than $200,000

Manhasset, New York, had the highest average personal loan balance in the fourth quarter of 2018 at a whopping $232,877. Syosset, New York, followed with an average personal loan balance of $146,936. In third place is Palos Verdes Estates, California, with an average personal loan balance of $133,060. Malibu, California, had the fourth-highest average personal loan balance at $126,968, while La Canada, California, came in fifth at $120,862.

The average estimated income of the top 10 cities was $147,586, while the average estimated income in U.S. was $79,054 for the fourth quarter of 2018.


Cudahy, California Has Lowest Average Personal Loan Balance

The five cities with the lowest average personal loan balance were all in California. Cudahy had the lowest at $3,360. Maywood had the next lowest average balance at $3,798, followed by Bell Gardens at $3,889. Huntington Park had the fourth-lowest average personal loan balance of $3,925 with Bell rounding out the top five cities with the fifth lowest average personal loan balance of $3,955 in the fourth quarter of 2018. The 10 cities with the lowest average personal loan balance owned, on average, 1.2 personal loans, which is higher than the national average of 0.8 personal loans for the fourth quarter of 2018.

Personal Loan Debt Is Maturing as Baby Boomers Have Highest Balances

The Baby Boomer generation had the highest average personal loan balance of $19,403 in the fourth quarter of 2018. Generation X had the second highest average balance at $17,401 followed by the Silent Generation with an average balance of $17,018. Millennials' average personal loan balance came in at $12,574 during the fourth quarter of 2018, while Generation Z had an average balance of $5,941.

Among people between the ages of 18 and 90, 68-year-olds had the highest average balance at $20,254 in the fourth quarter of 2018 compared with 69-year-olds in the fourth quarter of 2017. People between the ages of 45 and 52 averaged the highest number of loans per person at 1.1 each.


When Considering a Personal Loan

If you are thinking about applying for a personal loan, research your options to determine what kind of loan is right for you. Finding the best offer you qualify for will help you save on interest.

Here are some tips to consider when searching for the right personal loan:

  • Understand how personal loans work. Repaying a personal loan is different from repaying credit card debt. With a personal loan, you pay fixed-amount installments over a set period of time until the debt is completely repaid. Read about how personal loans work to learn more.
  • Know your credit score. Before making any credit decision, acquaint yourself with your credit history and scores so you understand how lenders see you. You can check your free credit score on our site.
  • Know the terms. It's crucial to understand the terms of any loan you're considering. Review the interest rates, length of the loan and what your monthly payment will be and consider how it fits with your budget.

If you need help finding a personal loan, check out Experian CreditMatch, which will match you with offers that you will most likely qualify for based on your credit profile.

Methodology: The analysis results provided are based on an Experian-created statistically relevant aggregate sampling of our consumer credit database that may include use of the FICO® Score 8 version. Different sampling parameters may generate different findings compared with other similar analysis. Analyzed credit data did not contain personal identification information. MSA is the acronym for metropolitan statistical area, which groups counties and cities into specific geographic areas for population censuses and compilations of related statistical data.

FICO® is a registered trademark of Fair Isaac Corporation in the U.S. and other countries.


Editorial Disclaimer: Opinions expressed here are author's alone, not those of any bank, credit card issuer or other company, and have not been reviewed, approved or otherwise endorsed by any of these entities. All information, including rates and fees, are accurate as of the date of publication.

This article was originally published on February 27, 2019, and has been updated.

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