Global Personal Loan Market Report and Forecast 2024-2032

Personal Loan Market Outlook

• Americans owed a collective USD 245 billion in personal loans as of Q4 2023, up from USD 222 billion a year earlier. This represents a 23.5 million Americans having a personal loan, a 4.4% increase year-over-year.

• As per industry reports, men carry 20% more personal loan debt on average than women, with men's debt averaging USD 17,716 compared to USD 14,780 for women.

• The most common reasons for taking out a personal loan are debt consolidation (40.6%), refinancing credit card debt (13.7%), and paying for everyday bills (7.8%), and home improvements (6.4%).

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Personal Loan Market Growth

Personal loan, also known as consumer loan, refers to a certain amount of money which is borrowed by a debtor to fulfil a personal financial need, such as debt consolidation, home improvements, emergency expenses, or large purchases. Interest rates for personal loans can vary depending upon the loan provider and credit history of the borrower. A personal loan is borrowed on a returnable basis and once the repayment is done, the promissory note, which is the evidence of loan, gets retired.

The key drivers shaping the personal loan market outlook include the rising demand for short-term financing, facilitated by low-income levels and rapid lending and approval processes. The market is also benefiting from the development of digitisation, which has streamlined the loan application and approval procedures, making personal loans more accessible to a broader population. Moreover, the availability of collateral-free credit programs and the flexibility offered by personal loans, such as choosing the loan length, have attracted more individuals towards this form of financing, further boosting market growth.

Key Trends and Developments

Adoption of digital technologies, rising expenditure on luxury goods, and government initiatives promoting lower interest rates have led to personal loan market development

May 2024

Nationwide has doubled its personal loan cap to EUR 50,000 to help fund home improvements. The move aims to provide more financial flexibility for customers looking to upgrade their living spaces.

November 2023

LendingClub Bank has crossed USD 1 billion in personal loans sold through its Structured Loan Certificates Program (SLCLC Program). The company expects to double this volume to USD 2 billion by mid-2024 as it continues to scale.

Adoption of digital technologies

One of the most significant trends in the personal loan market is the increasing adoption of digital technologies. Lenders are leveraging AI, big data analytics, IoT, and chatbots to streamline operations, improve customer experience, and ensure faster loan approvals.

Emergence of P2P lending

P2P lending does not involve interference from official financial institutions, making it more accessible compared to other modes. It also provides higher returns to investors and comes with lower interest rates. Platforms like Zopa in the UK and Lending Club in the US have become popular for their P2P lending services.

Increasing financial inclusion in rural areas

The rising financial inclusion among consumers have contributed significantly to the personal loan market expansion. In India, the government's efforts to promote financial inclusion through initiatives like the Pradhan Mantri Jan Dhan Yojana have led to a significant increase in the number of people with access to banking services, thereby driving the demand for personal loans.

Focus on enhancing client communications

Market players are focusing on enhancing immediate client communications and adopting digital tools to meet consumers' constant needs for personal loans. Fintech companies like Affirm and Klarna are offering personalised loan options and flexible repayment terms to increase customer satisfaction.

Personal Loan Market Trends

Increasing migration to smart urban cities, rising requirement of money to fund luxury lifestyles, and increasing accumulation of materialistic products are other crucial trends in the market as personal loans are often being used for home upgrades and purchasing of vehicles. Moreover, the rising adoption of cloud-based software to improve risk-assessment to be prudent about non-performing assets, is likely to add to the personal loans market growth. Moreover, increasing financial literacy among the young population is further shaping the dynamics of the market by increasing their demand.

Additionally, banks like HDFC Bank and ICICI Bank in India have introduced AI-powered chatbots to assist customers with loan applications and provide personalised services. The use of digitalisation and automation has made the documentation process easier, attracting more customers to apply for loans. Banks and NBFCs are adopting technology to enable paperless and automated lending processes, which is expected to open new avenues for the market in the coming years.

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Personal Loan Industry Segmentation

The EMR’s report titled “Personal Loan Market Report and Forecast 2024-2032” offers a detailed analysis of the market based on the following segments:

Market Breakup by Type

• P2P Marketplace Lending

• Balance Sheet Lending

Market Breakup by Age

• Less than 30 Years

• 30-50 Years

• More than 50 Years

Market Breakup by Marital Status

• Married

• Single

Market Breakup by Employment Status

• Salaried

• Business

Market Breakup by Region

• North America

• Europe

• Asia Pacific

• Latin America

• Middle East and Africa

Personal Loan Market Share

P2P lending segment is witnessing substantial growth as it provides higher returns and lower interest

The P2P marketplace lending segment, based on type, accounts for a healthy share of the market as P2P marketplace lending does not involve interference of any official financial institution. This type of lending is more accessible as compared to other modes, provides higher returns to investors, and comes with lower rate of interest. These advantages are fuelling the demand of this segment and contributing towards the growth of the personal loan market. Meanwhile, the balance sheet lending type of personal loans is expected to register a decent growth rate in the forecast period, as they provide greater transparency and bridge the gap between lenders and debtors.

The salaried segment holds a significant market share due to the better credit history of salaried individuals

The salaried segment dominates the market due to the steady income and better credit history of salaried individuals. Key growth drivers for the salaried segment include increasing awareness and financial inclusion among salaried individuals, especially in developing economies, rising demand for short-term financing to meet personal expenses, rapid lending and approval processes offered by lenders, and the adoption of digital technologies like AI, big data analytics, and chatbots by lenders to streamline operations and improve customer experience.

As per the personal loan market analysis, the business segment is projected to exhibit the fastest growth rate during the forecast period due to the increasing number of small and medium enterprises and the growing need for financing among business owners. Key growth drivers for the segment include rising demand for business loans and working capital financing, increasing adoption of digital lending platforms by business owners, availability of collateral-free credit programs and flexible repayment options, and the emergence of alternative lending platforms like P2P lending and crowdfunding.

Leading Companies in the Personal Loan Market

Market players are focused on enhancing client communications and leveraging technological advancements to streamline operations, improve customer experience, and drive market growth

American Express Company is one of the largest financial service corporations across the globe which provides personal, small business, and corporate credit cards. This company also provides services related to freight forwarding, travel cards, innovative digital products, and loans. It was founded in 1850 and is headquartered in New York, United States.

Avant, LLC. is a leading financial technology company which provides debt consolidation loans, emergency loans, home improvement loans, and instalment loans. Established in 2012 and based out of Illinois in the United States, this company strives to provide personal and other types of loans at lowest interest rates to its prime customers.

DBS Bank Limited is a prominent bank which provides services related to personal banking, credit cards, wealth management, corporate banking, and SME banking. The company also provides smart digital solutions that bring convenience to customers within a banking system. The establishment of this bank took place in 1968 and is headquartered in Marina Bay district of Singapore.

The Goldman Sachs Group, Inc. was founded in 1869 and is headquartered in New York City, United States. It offers a wide range of financial services and products, including investment banking, securities underwriting, asset management, wealth management, investment management, private-equity funds, hedge funds, and services such as financial planning and transaction banking.

Other key players in the global personal loan market include LendingClub Bank, N.A., Prosper Funding LLC., SoFi Lending Corp., Truist Financial Corporation, Wells Fargo & Company, and Industrial and Commercial Bank of China Limited, among others.

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Personal Loan Market Analysis by Region

Asia Pacific leads the market due to its large base of population and their ever-rising requirements

The Asia Pacific accounts for a sizable portion of the market for personal loans, driven by the increasing loan inquiries by youngsters across emerging economies, rapid boost in consumption-led credit products, and increasing loan access to improve quality of life. Loan growth in well-established economies such as Singapore is further invigorating the personal loan market share in the Asia Pacific.

In the coming years, Europe is likely to register a healthy growth in the market for personal loans, owing to the robust growth of digital loan application services, with a sizable share of the market accounted for by the United Kingdom. The increasing number of lenders from traditional financial institution and banks in United Kingdom is leading to a rapid expansion of the market in the country.

Key Highlights of the Report

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Personal Loan Market Report Snapshots

Personal Loan Market Size

Personal Loan Market Growth

Personal Loan Market Trends

Personal Loan Market Share

Personal Loan Companies

Personal Loan Market Regional Analysis