- Outstanding personal loan balances hit a high of $125.4 billion in the second quarter of 2018, according to TransUnion.
- The 35-and-under crowd accounted for nearly 25 percent of personal loans borrowed in 2018, LendingPoint found.
- You can use this loan to consolidate high-interest rate credit card debt, but be on the lookout for surprise expenses.
Tuesday, October 16, 2018
Student Loans Not the Only Debt Plaguing Millennials
Millennials — already laden with student loans — are adding a different kind of debt to their balance sheets: personal loans.
Those were the findings following an analysis of borrower data from 2015 through August 2018 by LendingPoint, a provider of personal loans. The lender studied 49,545 funded loans in all.
Personal loans typically have a set term of three to five years and generally charge a fixed interest rate. People tap them for a range of reasons, including emergencies and wedding finances.
You can access them at credit unions, consumer banks and online lenders.
These loans are unsecured, but if you default, your lender can assess late fees, and in extreme cases, try to garnish your wages and send debt collectors after you.
Back in 2015, roughly 12 percent of the individuals who took out a personal loan with LendingPoint were 35 and younger.
Since then, that proportion has roughly doubled: As of 2018, that age cohort now accounts for about a quarter of applicants.
"Millennials are driving the borrowing," said Mark Lorimer, chief marketing officer of LendingPoint.
"They are rapidly coming into their earnings and credit wheelhouse," he said. "It takes time to become creditworthy and we're seeing a higher proportion of millennials getting there."
Here are some likely drivers of the younger crowd's penchant for personal loans.
Overall, more individuals are taking on personal loans.
In the second quarter of 2018, outstanding personal loan balances hit a high of $125.4 billion, up 17.5 percent from the year-ago period, according to TransUnion.
The number of accounts has also been climbing, reaching 19.5 million in the second quarter of 2018 and reflecting a 12.5 percent increase from the second quarter of 2017, TransUnion found.
Used responsibly, personal loans can be a valuable tool if you're trying to consolidate high-interest debt and pay it all off.
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