Personal Loan Debt Reported as the Fastest Growing Consumer Debt in 2018

If you are facing a financial crisis, applying for a personal loan may seem like a good option for getting out of debt. If you have already taken this route, you’re not alone. According to new data from the credit reporting agency, Experian, personal loans are the fastest growing category of consumer debt.

Clients that come in and see me are having to file bankruptcy due to the inability to pay these loans. They are many of them we see such as: Sofi, Prosper Loan, Lending Club, Avant, Kabbage Loan, Mariner Finance, Best Egg, and many more signature loans. These are loans that give you money with just your signature as promise you’ll pay. Thankfully, we’re able to wipe away these high interest loans in bankruptcy.

Experian reported that national personal loan debt reached $291 billion as of the fourth quarter of 2018. This figure is a nearly 12 percent increase when compared to the fourth quarter of 2017. Other forms of consumer debt also increased, but the increase in personal loan debt was essentially double that of car loans, which grew at 4.3 percent; mortgages, which grew by 2.8 percent; and student loan debt, which grew at a rate of 5.8 percent. Even credit card debt only increased 5.9 percent from 2017.

Currently, there are approximately 36.8 million personal loan accounts still outstanding. Of these 36.8 million loan accounts, 10.8 percent of adults in the country owe on a personal loan obligation. Personal loans can be both secured and unsecured. Secured personal loans are guaranteed by some form of collateral, while unsecured ones are not otherwise connected to a piece of property in the event of default. Unsecured personal loans tend to come with a significantly higher interest rate when compared to secured personal loans.

The average personal loan balance as of the last quarter of 2018 was $15,143. The average monthly payment was $353 for borrowers at an annual percentage rate (APR) of 9.37 percent.
Personal loans are oftentimes a last resort for consumers who are struggling financially, and lenders know it. These types of loans tend to come with higher interest rates. Also, the more money that is borrowed, the higher the interest rate tends to be.

If the borrower wishes to pay off the loan in advance, many unsecured personal loans come with prepayment penalties or exit fees. Lenders do not expect borrowers who take out personal loans to pay off the loan sooner than expected, but if the borrower does end up doing so, he or she will end up paying a fee to close out the loan early. More online options are available for personal loans, which make the process of getting these high-risk loans that much easier.

I conduct free consultations from my offices in Orlando and Kissimmee and in maybe 3 out 5 cases, my client has a personal loan with some company. So whether you have a personal loan with Sofi, New Egg, Lending Club, On Deck Capital, Mariner Finance, Kabbage, Avant, One Main, Wells Fargo, Discover, or any other loans, we can help you breathe again and get out from under this burden of debt.

The Experian survey looked at the different generations who had outstanding loan balances, and by far, the baby boomer generation had the highest average personal loan balance at $19,403. Millennials had an average personal loan balance of $12,574, while those in Generation Z held the lowest balance of $5,941.

If you are struggling to pay off unsecured debt and think a personal loan is a good way to handle this debt, you may consider filing for bankruptcy in lieu of taking on an additional obligation. Many times, you can struggle for years paying on unsecured debt, only to be delaying the inevitable. A bankruptcy attorney can work with you to review your financial situation and assess what option may be best for you during a free initial consultation.

If you have questions on this topic or are struggling with debt, call our law firm. Having debt makes you stay up at night. It stresses you out. It ruins relationships. I went through it. Boldly, I mustered up the courage to call a bankruptcy attorney and I pressed the restart button in 2008. And even though eleven years has passed since I made that decision to restart my life, I never forgot what it did for me and how it helped me start over.

It even inspired me and my law firm to become the largest filers of bankruptcies in the country and in the top two in Florida- all from our offices in Orlando and Kissimmee. The Benenati Law Firm has eliminated nearly a billion dollars of debt for its bankruptcy clients, making the firm one of the top twenty filers of bankruptcy in the nation.

Remember, we are local in your hometown. We make our hours convenient for our clients and offer free consultations on Saturdays (9:00 a.m. – 3:00 p.m.) along with our normal business hours throughout the week. Go to https://www.407bankrupt.com/ or call 407-777-7777 to set up a free private consultation and learn more information. Because Life Has a Restart Button.

We remain OPEN and fully operational amid the coronavirus outbreak. We're happy to arrange an office conference, phone and video conferences to assist with your legal matter.

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