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|
|Rent or utilities||20.1%|
|Home or rental security deposit||5.2%|
|Entertainment and dining out||10.2%|
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|
|Rent or utilities||$1,063|
|Home or rental security deposit||$522|
|Entertainment and dining out||$589|
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.
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