More borrowers taking out personal loans
Personal loans were one of the types of credit that receded somewhat during the recession. However, they are starting to mount a serious comeback, through traditional and non-traditional lending sources.
Banks starting to offer personal loans again
One of the credit products that started to a back seat during the past few years was personal loans, at least the typical personal loans that one would borrow from banks, especially in 2008 and 2009, according to the Wall Street Journal, when personal loan originations at large lending institutions began to fall off.
However, personal loan origination began to pick back up in 2011, as loan volume in 2011 rose 4.5 percent over 2010. Even personal loan junk mail increased; mail offers for personal loans went from more than 290 million in 2010 to 424.8 million such mail adverts in 2011.
Major lenders, such as Wells Fargo, TD Bank and Discover Financial Services have reported increasing loan volumes. In October and November, TD Bank received 25 percent more personal loan applications than what was typical and Wells Fargo is said to have had a “double digit” increase in personal loan lending last year.
Non-traditional lenders booming
Fewer people may have been able to get personal loans from banks in the past few years, but that doesn’t mean lending or demand went anywhere. Online personal loan lenders like Prosper and Lending Club have been growing at near exponential rates for some time.
According to a recent press release on MarketWatch, Prosper.com, a peer-to-peer lending site, lent $10.8 million in personal loans in January. The site has recorded loan volume increases of more than 10 percent for the past consecutive 12 months. Loan volume for January was an increase of 178 percent over January 2011.
Lending Club, according to its press release on MarketWatch, a similar service, has done more than $500 million in personal loans since launching in 2007. The company’s loan volume has grown by 100 percent every year since its inception and is now originating $1 million in loans per day. The average loan size is $10,945 and the typical reason people borrow through Lending Club is to pay off credit cards and other debt.
More borrowing going on
According to the Los Angeles Times, overall consumer borrowing increased by $19.3 billion in December for the nation, as more people were taking out auto loans, student loans and other forms of credit. In the previous month, according to USA Today, Americans borrowed an additional $20.4 billion.