The third most common use for personal loans is for daily living expenses. (iStock)
The personal loan market is growing due in part to the rising cost of living. Approximately 14.5% of borrowers use personal loans for daily living expenses. MarketWatch Guide Research found.
Two of the most common reasons consumers take out personal loans are debt consolidation and home improvements. Almost 21.2% of personal loans are used for debt consolidation and 20.1% are used for home improvements. Borrowers across all industries are dealing with rising prices. food To building materials Housing expense. To cope with rising costs, these borrowers are turning to personal loans.
“Households have already cut back on non-essential purchases, leaving little left over from their budgets,” said E. J. Antoni, an economist at the Heritage Foundation, a public policy nonprofit. “The modest growth in consumer spending is supported by debt, which is unsustainable.”
The loans taken out are not small amounts. Thirty-five percent of the surveyed borrowers reported that the loan amount was between $10,000 and $50,000. Only 29% of borrowers have loans of less than $2,499.
When it comes to shopping for personal loans, Credible does the heavy lifting for you. With the click of a button, he can view multiple lenders, interest rates, and terms in one place.
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Household debt increases in all categories
At the end of last year, most consumer debts increased significantly.of Fourth quarter household debt report The Federal Reserve Bank of New York announced that mortgage debt increased by $112 billion and home equity lines increased by $11 billion.
Credit card balances increased by $50 billion in the fourth quarter and now stand at $1.13 trillion. Outstanding auto loans also increased by trillions of dollars to $1.61 trillion.
“Some consumers in the prime and below brackets are accumulating debt at an accelerating rate, likely due to rising prices for everyday items,” said Joseph Mayans, director of U.S. economics at Experian. Said. “This could continue to cause tensions in 2024, especially as the post-pandemic employment boom that brought rapid wage increases and easy job changes for many low-income workers comes to an end.”
The only debt measured in the survey that didn’t increase as much was student loan debt. It increased by $2 billion and now stands at $1.6 trillion.
If you need help paying off your debt, a personal loan allows you to consolidate your debt into one payment and pay it off at lower interest rates. If you want to know what debt consolidation loan options are available to you, visit Credible to compare interest rates and lenders.
More and more consumers are forced to live paycheck to paycheck due to heavy debt.
Cost of living is becoming increasingly difficult for many families
Some states are facing a cost of living crisis, with many residents spending most of their income just on housing and utilities.
According to one study, half of New York City residents do not have the income to meet basic living expenses. United Way of New York report. In 2021, only 36% of households were struggling to make ends meet. Among households in need, 79% of families spend more than 30% of their income on housing alone. The report also found that 30% of New York City households receive food assistance.
Californians also face a high cost of living compared to low incomes.a report Researchers from the California Legislative Analysis Office (LAO) examined the impact of the minimum wage on households of different sizes. A single parent with three children would live close to the poverty level if they worked full-time, but a single parent with four children would have a minimum wage below the poverty level.
Buying a home is especially difficult in California. In all but three California counties, single parents with one child earning the minimum wage often cannot afford to buy a home, according to the LAO report. In his eight counties in California’s most popular coastal region, minimum wage workers pay more than half of even a two-person household’s income.
If you need a loan, low-interest personal loans are a great option. Use online marketplaces like Credible to ensure you get the best personal loan rates and lenders for your needs.
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