Americans always seem to want more – we’re all guilty of it. But how far are we extending our hands to get the things we want?
How many Americans are taking out personal loans?
In the past year, 34% of Americans have taken out personal loans – that’s roughly 83.5 million people. Whether it be through an online lender or a good old fashioned bank, Baby Boomers, Gen X-ers and Millennials seem to have more in common when it comes to borrowing than they’d imagine.
With the help of our research provider, Pureprofile, finder.com surveyed 2,245 American adults to see how personal loans are being used in the US.
Top reasons people have taken out a personal loan
Emergencies happen. Bills stack up on top of each other. You realize the math you’re learning in school can’t begin to help you calculate what you’ll owe in tuition – and then you get into a fender bender on a sunny, Friday afternoon.
Accounting for 31% of borrowers, vehicle related expenses pull ahead – get it – as the top reason Americans are taking out personal loans. In the number two slot, 26% of people take out a personal loan in order to stay on top of bills. And then there’s the unfortunate 21% of people who landed in a pinch and needed extra cash for an emergency.
What else? Tuition for school doesn’t seem like that shocking of a reason 19% of people need personal loans. Finally, there are those gathering up their debts, melding them together and, hopefully, cashing in on a lower interest rate – making up for 15% of participants in our survey.
Would women rather have a trip to the Bahamas or a new car?
It turns out that women use personal loans to buy vehicles, pay bills, pay tuition fees and to cover rent. Men, on the other hand, are more likely to use personal loans to consolidate debt, renovate their home, relocate, support their business, pay for medical bills and vacation.
Baby Boomers will likely say “Millennials” and Millennials will likely say “Baby Boomers.” They’re both wrong. Gen X-ers have an average personal loan amount of $8,592 – making them the largest demographic of borrowers.
According to our survey, loans fall anywhere between $50 to $200,000. In that vast range, the average loan is a modest $7,576. Baby boomers slightly exceed the norm, borrowing an average of $7,703. Millennials are only borrowing $7,046 per personal loan on average.
When it comes to marital status, married couples take out slightly more than single and divorced borrowers. Numbers from our survey suggest that married or domestic partners have an average loan size of about $8,468. People who are single have a slightly smaller average loan size of $7,204 and those who are divorced borrow just $4,111 on average.
In which states are people most likely to take out a loan?
Floridians seem to be the ones getting by with a little more than just help from their friends. Texas and California are also hotspots where Americans are taking out personal loans.
Even though Floridians are taking out more loans, the average loan amount isn’t much compared to the average personal loan in California. Californians, on average are borrowing $11,883 – that doubles the average in both Texas and Florida.
Here are six tips to eradicate a looming personal loan.
Make extra payments. By exceeding your typical monthly payment, you can chip away at your loan while saving on interest.
Make biweekly repayments. Paying off your loan in half-repayments every two week can feel like you’re paying the same amount each month while shaving off at least a couple of weeks.
Refinance or consolidate. When better rates are offered, it’s wise to jump on them because you’ll ultimately end up saving money. And, if you consolidate multiple loans, you’ll save yourself the headache of having two or three different payments a month.
Get a balance transfer credit card. Sometimes, credit card providers will offer interest-free and low balance transfer rates. This is a smart decision if you have a small amount to pay off on your loan. You’ll pay no interest if you can lock in a card with a 0% balance transfer rate, but, be careful to pay attention to the timeframe of the promotion.
Save your change. You’d be surprised how fast your nickels and dimes add up. Look for an app that will round up change from purchases made with a card and use your savings for an extra payment.
Take advantage of discounts. Some lenders offer you a slight discount for either going paperless or enrolling in autopay, don’t sleep on these savings.
Kyle Morgan is a producer for finder.com who has worked for the USA Today network and Relix magazine, among other publications. He can be found writing about everything from the latest car loan stats to tips on saving money when traveling overseas. He lives in Asbury Park, where he loves exploring new places and sipping on hoppy beer. Oh, and he doesn't discriminate against buffalo wings — grilled or fried are just fine.
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