With an abundant availability of personal loans, peer-to-peer lenders and credit cards out there, how many of us use these sources to borrow money or take on debt?
It turns out that nearly 1 in 5 of us (19.1%) borrowed money in the past 12 months, which is just one finding from our recent study of 2,000 American adults.
But what reasons are we willing to get into debt over — and by how much?
The reasons we borrow
Vroom vroom! Of our survey respondents who borrowed money in the past 12 months, more than 1 in 4 (27.4%) did so to buy a vehicle. Also near the top is taking on debt for a holiday, a further 23.2% borrowing for a vacation.
From a practical perspective, 1 in 5 respondents found themselves borrowing cash to cover rent or utilities. On the other hand, 15.9% were willing to take on debt to satisfy a hankering to shop.
Another 13.6% of us needed some extra help for life’s unexpected events, with medical emergencies coming in next. This reason was closely followed by home renovations, sitting at just more than 1 in 10 (11.5%).
Interestingly, 10.2% of respondents borrowed money for dining out or other entertainment in the last 12 months – 2.1% more than those who borrowed purchase a home (8.1%)!
1 in 20 respondents (5.2%) sought out some help for a home or rental security deposit, equal to those borrowing for business. Finally, 2.4% borrowed to make their wedding that much more magical.
Reason for borrowing
Proportion of borrowers
Vacation
23.2%
Rent or utilities
20.1%
Home renovations
11.5%
Home or rental security deposit
5.2%
Home purchase
8.1%
Business
5.2%
Wedding
2.4%
Entertainment and dining out
10.2%
Medical emergency
13.6%
Shopping
15.9%
Vehicle
27.4%
Source: finder.com
Exactly how much are we borrowing?
Home purchases came out on top for the most money borrowed at an average $137,527 per person, followed by vehicles ($10,607 per person) and business ($7,176 per person).
Weddings came in next at $3,082 per person, followed by home renovations ($2,990 per person), vacations ($1,159 per person), rent or utilities ($1,063 per person) and medical emergencies ($958 per person). Shopping came in at an average $929.62 borrowed per person, followed by entertainment and dining out at $588.56 per person and home or rental security deposits at $521.55 per person.
Reason for borrowing
Average spend of those who borrowed in past 12 months
Vacation
$1,159
Rent or utilities
$1,063
Home renovations
$2,990
Home or rental security deposit
$522
Home purchase
$137,528
Business
$7,176
Wedding
$3,082
Entertainment and dining out
$589
Medical emergency
$958
Shopping
$930
Vehicle
$10,607
Source: finder.com
Where is this money coming from?
Of the categories included in the study, credit cards appear to be our most popular method for borrowing — the top choice for taking out money to vacation, renovate a home, get married, entertain, pay for a medical emergency and shop.
Surprisingly, borrowing from the bank of friends and family came in as the second most popular means, and it’s the top method for those needing extra cash for rent or utilities and a home or rental security deposit.
We based our results on a study of 2,000 Americans commissioned by finder.com and conducted by global research provider Pureprofile in February 2018.
Jennifer McDermott has been featured in Forbes, USA Today, Huffington Post, CBS and the Los Angeles Times. She is passionate about breaking down complex themes and providing actionable advice that empowers people to make better decisions about their money.
According to the latest research from finder.com, Americans spend about $750 billion on such convenience services as delivery, driving, handiwork, pet needs and subscription boxes.
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