How Common Are Personal Loans?

Personal loans are a fast-growing part of consumer borrowing. These fixed-payment loans can cover many needs—most often debt consolidation, but also home projects or major purchases. Because they’re (typically) unsecured, borrowers qualify based on credit history and income rather than collateral.

Personal loan balances have climbed steadily over the past few years. Millions of Americans now carry at least one personal loan. Here are some key stats:

• Total unsecured personal loan balances: $257 billion
• Consumers with an unsecured personal loan: 24.8 million
• Number of unsecured personal loan accounts: 30.1 million
• Average balance per borrower: $11,676
• Average balance per account: $8,524
• New originations: 5.4 million loans in Q1 2025
• Delinquency rate (60+ days past due): 3.37%

Es un hecho: Unsecured personal loan balances grew from $192 billion in 2022 to $257 billion in 2025—a 34% increase in three years.

source: TransUnion Q2 2025 Credit Industry Insights Report

Why People Take Personal Loans

Most people who take out personal loans do so to manage existing debt. Data from large marketplace lenders and federal research consistently show that debt consolidation is the top reason borrowers apply for these loans.

• Debt consolidation: About 70% of personal loans on major online platforms, including LendingClub and Prosper, were used to combine other debts.
• Home improvement: Roughly 10% of borrowers used personal loans for repairs or renovations.
• Medical or dental expenses: Around 3% reported using loan funds for health-related costs.
• Other personal uses: About 17% cited reasons such as large purchases or travel.

Survey data from other consumer sources support the same pattern. In a 2023 borrower survey, 48% said they used a personal loan for debt consolidation, followed by 17% for home improvement and 16% for a major purchase.

Typical Loan Amounts, Rates, and Terms

Personal loan costs vary widely depending on the lender, the borrower’s credit score, and whether the loan comes from a bank, credit union, or online marketplace. Most personal loans have fixed rates and set repayment terms, but fees and interest rates can differ significantly.

• Average loan amount at origination: About $7,000 in Q1 2025
• Typical term length: Around 30 months, though it can range from about 14 months for subprime borrowers to nearly five years for super prime borrowers
• Average APR (all lenders): 26.5% as of June 2025
• Average bank rate (24-month loan): 11.14% in August 2025
• Origination fees: Often 1%–10% of the loan amount
• Autopay discount: Usually 0.25 percentage points off the interest rate

Many lenders charge upfront fees or add-on products that raise total borrowing costs. Reading disclosures carefully helps borrowers understand true repayment terms, including any prepayment penalties.

Es un hecho: Marketplace lenders typically cap personal loan APRs near 36%, while average bank rates are less than half that.

source: Investopedia

Who Gets Personal Loans?

Personal loans reach a wide range of borrowers, but most new loans go to people with below-prime credit scores. Even so, most of the dollars lent each quarter come from borrowers with stronger credit.

• Consumers with a personal loan: About 24.8 million U.S. adults in Q2 2025
• Credit profile of new borrowers: In Q1 2025, 63% of new personal loan originations went to below-prime borrowers
  • Subprime: 35.4%
  • Near prime: 27.6%
  • Prime: 16.8%
  • Prime plus: 11.0%
  • Super prime: 9.2%
• Where loans come from:Fintech lenders issued about 40% of new personal loans in Q1 2025, up from roughly 31% a year earlier
  • Banks: 13%
  • Credit unions: 17%
  • Finance companies: 29%
• Share of new-account dollars: Fintechs handled just over 52% of new balances that quarter, the only group to grow share year over year
• Median APR (overall):~ 21%
  • Near prime: 27.1%
  • Prime: 17.8%
  • Prime plus: 13.0%
  • Super prime: 10.9%

Repayment and Delinquency Trends

Most personal loans are paid back on time, but late payments and charge-offs still occur. Recent data shows delinquencies have steadied after several years of increases.

• Delinquencies (consumer level):
  • 30+ days past due: ~5.2%
  • 60+ days past due: ~3.4%
  • 90+ days past due: ~2.2%
• Year-over-year change: Slightly lower across all delinquency buckets compared with 2024
• Charge-offs (bank proxy): Around 1% for “other consumer loans,” a broad category that includes personal loans
• Performance by loan vintage: 2024 loans through Q3 are tracking similarly to 2023, with late-2023 loans performing slightly better at 60+ days past due
• Debt consolidation outcomes: Borrowers who used personal loans to consolidate credit card debt cut their card balances by about 57% right after consolidation, but many rebuilt balances within 18 months.

How Personal Loans Compare to Other Debt

Personal loans fall between credit cards and secured loans in both cost and structure. They’re usually cheaper than credit cards but more expensive than auto or mortgage loans. Because payments are fixed, they can be easier to budget for than revolving credit.

Interest Rates (as of mid-2025)

• Personal loans (banks, 24-month average): 11.14%
• Personal loans (marketplace average): 26.5%
• Credit cards (accounts charged interest): 22.83%
• Auto loans (60-month new car): 7.64%
• Payday loans: About $15 per $100 borrowed for two weeks, equal to ~391% APR
• BNPL “pay in four” plans: Often 0% interest, but about 10% of users paid at least one late fee

Typical Terms and Structures

• Personal loans: Fixed payments, set payoff date, typical term about 30 months
• Credit cards: Revolving credit, no fixed payoff date, variable interest
• Auto loans: Secured by the vehicle, common terms of 60–72 months
• Payday loans: Due in full by the next payday, usually two weeks
• BNPL plans: Four payments over about six weeks

Es un hecho: Personal loan balances are much smaller than credit card or mortgage debt, but they’ve grown faster than any other major loan category in recent years.

What Borrowers Look for When Choosing a Loan

When people shop for a personal loan, cost is the top concern. Surveys show borrowers care most about the total interest they’ll pay over time and whether they can trust the lender.

• Top decision factor: 48% of borrowers ranked loan cost as their most important consideration
• Within “cost,” APR mattered most: 78% said the interest rate mattered more than fees
• Where people apply:
  • 48% said a lender’s website was a top factor when deciding where to apply
  • 40% chose lenders they already had a relationship with
  • 26% looked at third-party reviews before applying
• Digital demand signals: Prescreen direct-mail volume rose 27% year over year to 366 million pieces in Q2 2025, and online inquiry volume was 50% higher than a year earlier
• Customer satisfaction: In J.D. Power’s 2024 Consumer Lending Satisfaction Study, 73% of personal-loan customers were considered financially unhealthy, while “healthy” customers were much more likely to borrow again from the same lender (79% vs. 55%)

Alternatives to Personal Loans

Personal loans can be useful, but they’re not the only way to cover expenses or pay down debt. Depending on your situation, other options might cost less or carry fewer risks.

• Credit card balance transfers: Some cards offer 0% introductory APRs on transferred balances for a limited time. These can help reduce interest costs if you can pay off most of the balance before the promo period ends.
• Credit union loans: Many credit unions offer smaller personal loans or Payday Alternative Loans (PALs) with lower fees and capped interest rates.
• Payment plans: Utilities, medical providers, and some landlords allow payment plans that break large bills into smaller installments, often with no added interest.
• Home equity loans or lines of credit: For homeowners with enough equity, borrowing against your home may provide lower rates. However, missed payments can put your property at risk.
• Employer-based or community lending programs: Some employers and nonprofit organizations offer small emergency loans or grants to help with short-term needs.
• Debt relief or settlement programs: For people struggling with high unsecured debt, reputable debt relief companies can negotiate lower payoff amounts. This option may affect credit but can help resolve large balances more affordably.