US Average Personal Loan Debt Changes 2012 - 2022

American's personal loan debt has been constantly growing since 2012. Discover the details in the article below.

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US Average Personal Loan Debt Changes 2012 - 2022

Author:

Emma Jackson

How America's Average Personal Loan Debt Has Changed Over the Past 10 Years

For those who don't know or have forgotten, a personal loan is a type of short-term unsecured loan ranging from $100 to $100,000 that can be used to purchase personal items or restructure old debts.

US statistics show that total personal debt has been on an upward trend over the past 10 years. The only exception was 2020 when the total debt tended to decrease (Figure 1).

personal loan debt

Figure 1 – Total U.S. Personal Loan Debt 2012-2021

Figure 1 shows that the total debt on general loans in 2021 increased almost 4 times compared to 2012, which suggests an increase in the attractiveness of personal loans for the American population. The decline in personal lending in 2020 is due to economic uncertainty, which was caused by COVID-19. The pandemic forced lenders to initially tighten credit conditions under personal lending agreements. At the same time, borrowers themselves were reluctant to take out a new 10.000$ Personal Loan, not knowing what would happen to their employment and income levels. By the end of 2020, in order to attract new borrowers, lenders eased lending conditions, placing a bet on borrowers with lower credit ratings. This ultimately translated into a significant increase in total personal loan debt in 2021.

It is also possible to state the dynamics of the increase in the average new personal loan over the years (Table 1).

Table 1 – Average quarterly size of a new consumer loan, 2019–2022, dollars

Year	Quarter
Year	Q₁	Q₂	Q₃	Q₄
2019	5,432	6,790	6,382	6,276
2020	5,619↑	6,690↓	6,092↓	5,816↓
2021	5,213↓	7,129↑	7,168↑	7,104↑
2022	6,656↑	8,085↑

The average size of a consumer loan in the second quarter of 2022 amounted to $8,085, an increase of 21.5% compared to the first quarter of 2022, and almost 50% compared to the first quarter of 2019.

There are also trends in increasing popularity of 20.000$ Loan across all generation groups, which confirms the attractiveness of personal lending among both young people and older age groups (Table 2).

Table 2 – Average debt on personal loans by age groups, 2019–2022, dollars

Year	Generation
Year	Z (18-24)	Millennialls (25-40)	X (41-56)	Baby boomers (57-75)
2019	4,526	11,819	17,175	19,253
2020	6,004↑	12,306↑	17,733↑	19,700↑
2021	6,658↑	13,418↑	18,922↑	20,370↑

As can be seen from table 2, the highest average personal loan debt is observed among baby boomers - people of the older generation. It increased in 2021 compared to 2019 by 6 percent. Generation Z increased debt by nearly 50 percent, millennials by 13.5 percent, and Generation X by 10 percent. Consequently, it is increasing at a faster rate among young people of generation Z, who every year have the opportunity to increase their income and, as a result, personal lending and personal loan balances.

The record inflation that is taking place in 2022 has hit consumers with bad credit hard, leading to an increase in personal loan delinquency levels in 2022.

Table 3 – The share of overdue personal loans in 2019-2022, %

Year	Quarter
Year	Q₁	Q₂	Q₃	Q₄
2019	3,47	3,12	3,28	3,46
2020	3,39↓	3,08↓	2,53↓	2,68↓
2021	2,66↓	2,28↓	2,52↓	3,00↑
2022	3,25↑	3,37↑

According to credit statistics, in the second quarter of 2022, 3.37% of borrowers delayed payments on personal loans for 60 days or more. At the same time, given the global financial difficulties, many lenders offer borrowers various loan conditions such as Personal loans for bad credit in order to avoid default by them. First, lenders do not inform credit bureaus about personal loans that are in arrears. Secondly, they offer customers various types of consumer loans that can be used, including refinancing old debts, with significant loan amounts of $10,000, $20,000, and continue to provide consumer loans to borrowers with a bad credit history.

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Material disclosure

APR Disclosure. Some states have laws limiting the Annual Percentage Rate (APR) that a lender can charge you. APRs for cash advance loans range from 200% and 1386%, APRs for installment loans range from 6.63% to 225%, and APRs for personal loans range from 4.99% to 450% and vary by lender. Loans from a state that has no limiting laws or loans from a bank not governed by state laws may have an even higher APR. The APR is the rate at which your loan accrues interest and is based upon the amount, cost and term of your loan, repayment amounts and timing of payments. Lenders are legally required to show you the APR and other terms of your loan before you execute a loan agreement. APR rates are subject to change.

Here's a quick example:

You borrow $1,000 with an APR of 3% over 3 years (assuming an annual APR calculation).
Year 1 interest: 1,000 x 0.03 = 30 and 30 + 1,000 = 1,030
Year 2 interest: 1,030 x 0.03 = 30.9 and 30.9 + 1,030 = 1061
Year 3 interest: 1,061 x 0.03 = 31.83 and 31.83 + 1,061 = 1,092.83 In total, you'll pay back $1,092.83 at the end of the finance period.

For peace of mind, and to ensure you know what you're going to pay, ask your lender exactly what fees are included in the APR figure they offer you.

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US Average Personal Loan Debt Changes 2012 - 2022

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US Average Personal Loan Debt Changes 2012 - 2022

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