Study shows non-prime borrowers looking beyond banks for loans
Traditional American banks are no longer relevant for much of America.
New research shows that many Americans don’t believe they can rely on their banks to offer them a loan when they need it. Elevate recently disclosed the statistics of the study, which show that two-thirds of American adults have non-prime credit scores under 700.
The data was compiled from interviews of 1,005 US consumers and was conducted by the Center for the New Middle Class (CNMC) from February 2 through February 5. The non-prime consumers interviewed felt they had less access to credit from traditional banks due to their lower credit scores.
The results displayed a lack of confidence in banks.
The majority of credit product consumers are non-prime Americans. While Americans have used traditional banks to serve their financial needs, it’s clear that changes are on the move.
Non-prime borrowers feel their banks no longer serve their needs. When you consider that they’re four times more likely to have been denied a loan in the past year, it’s easy to understand why.
Non-prime borrowers often need credit for survival, as they’re often plagued by income fluctuations that make it harder to make ends meet. Unfortunately, they’re less likely to be approved for the credit they desperately need.
Because they’re more likely to face rejection based on their credit, they’re eight times more likely to steer away from traditional banks and six times more likely to do their banking online.
While many Americans rely on credit cards for emergencies, very few non-prime Americans have this resource at their disposal. Another study last year from Elevate showed that even when they do, the credit limits are often too low to meet their needs.
Jonathan Walker, executive director of the CNMC, says non-prime Americans often can’t rely on a traditional bank when a financial hurdle comes their way.
“Across the board, we see that the non-prime have little confidence a bank can provide for them, yet surprisingly most indicate a bank would still be their first choice for a personal loan,” Walker emphasized.
He hinted that things may be different in the future if banks adapt to changing regulatory environments and find new underwriting measures.
The future of banking is here.
It’s clear Americans are seeking other options when it comes to managing their finances. While the big banks try to figure it all out, Americans need answers now, so many have turned to online lenders to serve their needs. Non-prime borrowers are discovering alternatives to traditional banking.
In fact, most of the top 10 mortgage lenders are non-banks, as finder.com has previously reported.
If you’re one of many Americans turning to online banking, learn more about the various personal loans available through online lenders.