According to the report by Expert Market Research (EMR), the global personal loan market size is projected to grow at a CAGR of 32.20% between 2024 and 2032. Aided by the increasing consumer demand for credit for various purposes including debt consolidation, home renovation, and emergency expenses, the market is expected to grow significantly by 2032.
A personal loan is a type of unsecured loan, which means it does not require collateral or security in the form of assets like property or a car. It is provided by banks, credit unions, online lenders, and other financial institutions to individuals based on their credit history and ability to repay the loan from personal income. Repayment is usually through fixed monthly payments over a predetermined period, known as the loan term.
A combination of technological advancements, changing consumer behaviour, and regulatory evolutions has significantly fuelled the personal loan market growth. The advent of digital lending platforms has streamlined the loan application process, offering faster approval times, minimal paperwork, and more personalised loan offerings. This digital shift has not only enhanced customer experience but also broadened the market’s reach to include underserved segments such as small business owners and individuals with limited credit history.
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Consumer behaviour has also played a pivotal role in the personal loan market expansion. With an increasing number of individuals seeking financial flexibility and immediate access to funds, personal loans have become a popular choice due to their unsecured nature and versatility in use. Moreover, the trend towards debt consolidation, driven by the desire to manage multiple debts efficiently and reduce interest expenses, has further propelled the demand for personal loans.
P2P lending platforms are reshaping the personal loan market by connecting borrowers directly with investors without the intermediation of traditional financial institutions. This model offers competitive interest rates, more accessible loan approvals, and a diversified investment opportunity for individuals. The growth of P2P lending is fuelled by its ability to offer a more efficient, transparent, and customer-friendly alternative to traditional lending.
With the goal of expanding access to credit, many lenders are now incorporating alternative data into their credit scoring models. This includes information like utility bill payments, rent history, and even social media activity. As per the personal loan market analysis, by using alternative data, lenders can assess the creditworthiness of individuals with thin or no credit history, opening up the market to a broader audience and promoting financial inclusion.
Blockchain technology is beginning to make its mark on the market by offering enhanced security, transparency, and efficiency. Through decentralised ledgers, blockchain can streamline the lending process, reduce fraud, and lower operational costs. Additionally, smart contracts automate the loan agreement and repayment process, further enhancing the efficiency and security of personal loans. The integration of artificial intelligence (AI) and machine learning (ML) in the lending process presents a significant opportunity for market players. As per the personal loan market outlook, these technologies can enhance credit scoring models, improve risk assessment, and offer personalised loan products, thereby optimising operational efficiency and customer satisfaction.
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The market exhibits considerable variation across regions, influenced by economic conditions, consumer credit behaviour, and regulatory landscapes. North America and Europe have traditionally dominated the market, attributed to their advanced financial infrastructures and high consumer credit awareness. Regulatory changes in various countries have aimed to protect consumers and promote fair lending practices, which, in turn, have contributed to the personal loan market share. These regulations ensure transparency, limit interest rates, and encourage responsible lending, thereby fostering trust among borrowers and contributing to the market’s expansion.
Market Segmentation
The market can be divided based on type, age, marital status, employment status, and region.
Market Breakup by Type
- P2P Marketplace Lending
- Balance Sheet Lending
Market Breakup by Age
- Less than 30 Years
- 30-50 Years
- More than 50 Years
Market Breakup by Marital Status
- Married
- Single
Market Breakup by Employment Status
- Salaried
- Business
Market Breakup by Region
- North America
- Europe
- Asia Pacific
- Latin America
- Middle East and Africa
Competitive Landscape
The EMR report looks into the market shares, plant turnarounds, capacities, investments, and mergers and acquisitions, among other major developments, of the leading companies operating in the global personal loan market. Some of the major players explored in the report by Expert Market Research are as follows:
- American Express Company
- Avant, LLC.
- DBS Bank Limited
- The Goldman Sachs Group, Inc.
- LendingClub Bank, N.A.
- Prosper Funding LLC.
- SoFi Lending Corp.
- Truist Financial Corporation
- Wells Fargo & Company
- Industrial and Commercial Bank of China Limited
- Others
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