Personal loans emerge as an essential financial lifeline in a difficult economy, according to JD Power
TROY, Mich.–(BUSINESS WIRE)–The personal loan market has come back to life after nearly coming to a halt during the height of the pandemic. According to the 2022 JD Power Consumer Satisfaction with Loans in the United States Study,SM released today, a combination of competitive rates, easy access and a variety of options has led to widespread consumer adoption of personal loans, with some of the biggest growth occurring among people financially vulnerable1 consumers who access these products to get through tough economic times.
“Increasingly, personal loans are filling the void left by the end of pandemic-era relief efforts, bringing an important new dynamic for banks, credit card companies and FinTechs at the center. of this market,” said Craig Martin, Managing Director and Global Head of Wealth and Lending Intelligence at JD Power. “As customers are largely satisfied with these products and the market continues to grow, it’s important for lenders to ensure that the experiences they offer match the promises they make to support better financial health. ”
Here are the key findings from the 2022 study:
- Personal loans as lifelines for the financially vulnerable: Almost two in five (38%) personal loan customers are classified as financially vulnerable. The top three reasons to get a personal loan focus on dealing with debt (including debt consolidation), lowering the interest rate on current debt, and lowering the monthly payment on existing debt. Some brands that cater to high-risk customers have almost double the average number of financially vulnerable customers.
- Gateway to other financial products: Overall customer loyalty to personal loan products is high, with 61% of loan customers indicating that they are likely to use their lender again. This could create expanded opportunities for lenders who historically only offered loans, as these companies expand their product offerings with checking, savings, credit card and investment options.
- Advertising plays a key role in adoption, but not all ads are created equal: Nearly half (47%) of consumers say an advertisement prompted them to consider a personal loan. However, the range of advertising effectiveness is wide, with some brands only getting 31% of new business from advertising and others generating 56% of their business from advertising.
- Men and women react differently: The study also reveals significant differences in men’s and women’s responses to specific brand experiences. At the individual brand level, overall satisfaction with lenders varied by at least 25 points (on a 1,000-point scale) between men and women at more than half of the lenders in the study and by more than 50 points for nearly a quarter of the marks.
“As the personal loan market continues to grow rapidly, it is critical to note that there is no single option that can do it all for all consumers,” said Tom Lawler, Head of Consumer Lending Intelligence at JD Power. “We are seeing a clear phenomenon where industry-level averages provide perspective, but some customer groups’ experience at the brand level may be significantly different. High-performing companies have a clear understanding of different needs and expectations of their target customers and optimally invest resources to meet or exceed the expectations of these different groups.
Ranking of studies
Marcus of Goldman Sachs (776) ranks first among personal lenders in overall customer satisfaction. American bank (757) ranks second and American Express (754) ranks third.
The US Consumer Lending Satisfaction Study has been redesigned for 2022. It measures overall customer satisfaction based on performance on four factors (in alphabetical order): application; loan management; shopping; and terms. The study is based on responses from 5,269 personal loan customers and was conducted from January to March 2022.
For more information on JD Power’s US Consumer Satisfaction Study, please visit https://www.jdpower.com/business/financial-services/us-consumer-lending-satisfaction-study
See the press release online at http://www.jdpower.com/pr-id/2022056.
About JD Power
J.D. Power is a global leader in consumer insights, advisory services, data and analytics. A pioneer in using big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, JD Power has been providing incisive industry insights into customer interactions with brands and brands for more than 50 years. products. The world’s leading companies in key industries trust JD Power to guide their customer-facing strategies.
JD Power has offices in North America, Europe and Asia-Pacific. To learn more about the company’s commercial offerings, visit JDPower.com/business. The JD Power Automotive Buying Tool is available at JDPower.com.
About JD Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info
1 JD Power measures the financial health of any consumer as a metric combining their spend-to-savings ratio, creditworthiness, and safety net elements like insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.