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By the end of 2022, 27 million Americans had an outstanding personal loan balance with the average amount owed being $11,116. The interest rates of these loans are also the highest they’ve been since 2011 at 11.23 percent.
Sources: TransUnion and the St. Louis Federal Reserve
As of the second quarter in 2022, Americans owed over $192 billion in personal loans, according to TransUnion®. This was a 31% increase from 2021 and is thought to be due to the financial hardships Americans experienced during the COVID pandemic that overwhelmed the nation in 2020.
If you’re one of the many Americans who took out a personal loan in early 2022, the good news is that interest rates were very low, according to the St. Louis Federal Reserve. Since then, rates have reached new highs, so many Americans are struggling to pay back these loans.
Understanding the current trends in personal loans can help you see where you stand financially. We’ve gathered 10 personal loan statistics that include the most common reasons people take out personal loans, delinquency rates and which states have the highest personal loan debt to help you make better financial decisions if you’re accumulating too much debt.
Millions of Americans are taking out personal loans, and the following are some of the most interesting facts on the topic.
According to TransUnion, Americans owed roughly $9,896 on average as of the first quarter in 2022, the highest it’s been in recent years. Americans took out loans at an average of $6,656 per loan, which was over $1,000 more than in the previous quarter of 2022.
The amount owed per borrower dropped significantly between Q2 and Q3 in 2022, but by the end of the fourth quarter, the average amount owed increased by over 100 percent with the new loan amount dropping to $8,018.
The increase in personal loan debt may have been due to the inflation the country experienced in 2022. TransUnion also reports that there were more loans approved to “super prime borrowers,” or those with credit scores over 720, stating, “On a percentage basis, personal loan originations for subprime and near-prime borrowers increased in the single digits [year over year] whereas super prime borrowers experienced a 33% rise in the third quarter.”
The amount of Americans taking out personal loans increased 12 percent from 23.9 million in the first quarter of 2022 to 27 million by the fourth quarter.
Prior to the beginning of the COVID-19 pandemic, the total amount of personal loan borrowers was 23.3 million at the end of 2019 and dropped to 21.2 million by the end of 2020. The number of borrowers then grew back to 22.8 million in the following fourth quarter of 2021 and continued to grow as the pandemic regressed.
| Quarter | Q4 2022 Average new account balance |
|---|---|
| Q4 2019 | 23.3 million |
| Q4 2020 | 21.2 million |
| Q4 2021 | 22.8 million |
| Q4 2022 | 27 million |
LendingTree conducted a survey of their users in 2022 and found that the most common reason consumers took out personal loans was to pay down other debts. Over 58 percent of borrowers used these loans to pay down debt, and the other main reasons included credit card refinancing, home improvements and other major purchases.
| Rank | Reason | Percentage of respondents |
|---|---|---|
| 1 | Debt consolidation | 41% |
| 2 | Other | 17.3% |
| 3 | Credit card refinance | 17.3% |
| 4 | Home improvements | 6.2% |
| 5 | Major purchase | 4.1% |
| 6 | Medical expenses | 3.0% |
| 7 | Moving/relocation | 2.9% |
| 8 | Everyday bills | 2.9% |
| 9 | Car financing | 1.7% |
| 10 | Car repair | 1.1% |
| 11 | Business | 0.9% |
| 12 | Vacation | 0.5% |
| 13 | Homebuying | 0.4% |
| 14 | Wedding expenses | 0.4% |
During the second quarter of 2022, the Federal Reserve Bank of St. Louis reported that interest rates reached an all-time low of 8.73 percent. By the end of the year, these rates were the highest they’ve been since 2011 at over 11.2 percent.
Based on TransUnion data, personal loans account for less than four percent of the total number of accounts when compared to other types of loans, such as credit cards, home and auto loans.
| Account type | Number of accounts | Percentage of accounts |
|---|---|---|
| Credit card | 518.4 million | 76.3% |
| Auto loan | 81.2 million | 11.9% |
| Mortgage loan | 52.6 million | 7.83% |
| Personal loan | 27 million | 3.97% |
It’s also important to note that not all credit card accounts carry a balance.
Delinquent accounts are accounts 60 days or more past due and can hurt your credit score. The Q4 TransUnion report shows that the delinquency rate dropped year over year between 2019 and 2020, but was up 53 percent as of 2022, with an overall delinquency rate of 4.14 percent.
| Quarter | Delinquency rate |
|---|---|
| Q4 2019 | 3.48% |
| Q4 2020 | 2.7% |
| Q4 2021 | 3% |
| Q4 2022 | 4.14% |
TransUnion’s 2022 Credit Snapshot shows that in the last month of the report, those with the lowest credit scores have the highest delinquency rate of 23.9 percent, while super prime borrowers are only at 12 percent.
| Credit score range | Percentage of delinquent borrowers |
|---|---|
| Subprime (300 to 600) | 23.9% |
| Near prime (601 to 660) | 23.7% |
| Prime (661 to 720) | 23.3% |
| Prime plus (721 to 780) | 17% |
| Super prime (781 to 850) | 12% |
TransUnion’s 2022 Credit Snapshot reports that New Jersey has the highest average new account balance at over $13,000, and Oklahoma has the lowest at $3,170. Although Oklahoma has the lowest new account balance, they have the highest delinquency rate at 7.73 percent.
| State | Q4 2022 Average new account balance | Q4 2022 Delinquency rate |
|---|---|---|
| AK | $10,296 | 2.9% |
| AL | $4,362 | 6.59% |
| AR | $7,089 | 5.18% |
| AZ | $9,343 | 3.78% |
| CA | $10,454 | 3.47% |
| CO | $12,322 | 2.03% |
| CT | $11,712 | 2.57% |
| D.C. | $9,016 | 6.55% |
| DE | $9,146 | 4.04% |
| FL | $8,379 | 3.94% |
| GA | $8,621 | 5.18% |
| HI | $12,224 | 2.28% |
| IA | $7,443 | 2.94% |
| ID | $9,072 | 4.38% |
| IL | $9,236 | 3.46% |
| IN | $7,439 | 2.97% |
| KS | $8,349 | 3.05% |
| KY | $6,875 | 3.36% |
| LA | $6,797 | 5.07% |
| MA | $12,518 | 2.24% |
| MD | $10,956 | 2.77% |
| ME | $6,651 | 1.67% |
| MI | $7,052 | 3.21% |
| MN | $10,692 | 3.73% |
| MO | $6,522 | 6.69% |
| MS | $5,179 | 4.96% |
| MT | $9,326 | 2.53% |
| NC | $10,035 | 3.03% |
| ND | $8,051 | 1.89% |
| NE | $7,755 | 3.65% |
| NH | $11,719 | 2.31% |
| NJ | $13,494 | 3.49% |
| NM | $5,418 | 6.31% |
| NV | $8,839 | 3.74% |
| NY | $11,843 | 2.77% |
| OH | $7,595 | 3.75% |
| OK | $3,170 | 7.73% |
| OR | $10,523 | 2.93% |
| PA | $10,418 | 3.06% |
| RI | $8,744 | 2.14% |
| SC | $5,924 | 4.89% |
| SD | $9,945 | 2.06% |
| TN | $5,355 | 5.38% |
| TX | $4,952 | 6.33% |
| UT | $7,966 | 4.23% |
| VA | $9,875 | 3.37% |
| VT | $6,180 | 0.82% |
| WA | $9,570 | 2.94% |
| WI | $6,489 | 3.95% |
| WV | $10,864 | 1.96% |
| WY | $7,698 | 2.66% |
More and more Americans are turning to financial technology companies, also known as FinTech, for their personal loans. These are online banking services that are done via a company’s website or mobile app, and 32.9 percent of all personal loans are done through these types of companies.
| Lender type | Distribution of total balances |
|---|---|
| FinTech | 32.9% |
| Banks | 20.5% |
| Credit unions | 19.7% |
| Other finance companies | 26.9% |
If you’re one of the 27 million Americans with a personal loan, you don’t have to let your debt harm your credit score. As you’ve learned from these personal loan statistics, many Americans have turned to personal loans to pay off other debts, but many people are delinquent with their payments, which can hurt their scores.
Credit.com provides a variety of credit tools and tips to help you work to repair and improve your credit. You can learn more about our services, like ExtraCredit, or click here to get your free credit report card.