Personal loans are proving to be an important financial lifeline in a troubled economy, says JD Power
TROY, Mich.–(BUSINESS WIRE)–The personal loan market has revived after nearly stalling at the height of the pandemic. According to JD Power’s 2022 US Consumer Lending Satisfaction StudySM The combination of competitive interest rates, easy access and a multitude of options released today has led to widespread consumer credit adoption, with some of the most significant increases seen among the financially vulnerable1 Consumers accessing these products to get through a tough economic time.
“Retail credit is increasingly filling the void left by the end of pandemic-era relief efforts, introducing some important new dynamics for the banks, credit card companies and FinTechs at the heart of this marketplace,” he said Craig Martin, Managing Director and Global Head of Wealth and Lending Intelligence at JD Power. “While customers are largely satisfied with these products and the market continues to grow, it is important for lenders to ensure that the experiences they deliver live up to the promises they make in support of improved financial health.”
The following are the key findings of the 2022 study:
- Personal loans as lifelines for the financially weak: Almost two in five (38%) of personal loan customers are classified as financially vulnerable. The top three reasons for getting a personal loan focus on debt management (including debt consolidation), lower interest rates on current debt, and lower monthly payments on existing debt. Some brands that target higher-risk customers have nearly twice 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 saying they are likely to use their lender again. This could create expanded opportunities for lenders that have historically only offered loans, as these companies expand their product offerings to include check, savings, credit card, and investment options.
- Advertising plays a key role in adoption, but not all ads created are created equal: Almost half (47%) of consumers say an ad made them consider a personal loan. However, the range of advertising effectiveness is wide, with some brands deriving as little as 31% of their new business from advertising and others generating 56% of their business from advertising.
- Men and women react differently: The study also finds significant differences in how men and women respond to certain brand experiences. At the individual brand level, overall satisfaction with lenders varies by at least 25 points (on a 1,000-point scale) between men and women for more than half of the lenders in the study and by more than 50 points for nearly a quarter of them the brands.
“As the personal loan market continues to grow rapidly, it’s important to note that there is no one-size-fits-all option that can do everything for all consumers,” he said Tom Lawler, Head of Consumer Lending Intelligence at JD Power. “We see a clear phenomenon where industry-level averages provide perspective, but the experience of specific customer groups at the brand level can be significantly different. The most successful firms have a clear understanding of the diverse needs and expectations of their target customers, and invest resources optimally to meet or exceed the expectations of these diverse groups.”
Marcus from Goldman Sachs (776) ranks highest among personal loan lenders in terms of overall customer satisfaction. US bank (757) second and American Express (754) in third place.
The US Consumer Lending Satisfaction Study has been redesigned for 2022. It measures overall customer satisfaction based on performance in four factors (in alphabetical order): application; credit 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 the JD Power US Consumer Lending Satisfaction Study, visit https://www.jdpower.com/business/financial-services/us-consumer-lending-satisfaction-study
See the online press release below http://www.jdpower.com/pr-id/2022056.
About JD Power
JD Power is a leading global provider of consumer insights, advisory services, and data and analytics. A pioneer in using big data, artificial intelligence (AI), and algorithmic modeling capabilities to understand consumer behavior, JD Power has been delivering concise industry insights into customer interactions with brands and products for more than 50 years. The world’s leading companies in key industries rely on JD Power for their customer-centric strategies.
About JD Power and Advertising/Advertising Rules: www.jdpower.com/business/about-us/press-release-info
1 JD Power measures each consumer’s financial health as a metric that combines their spending/savings rate, credit history, and safety net elements such as insurance coverage. Consumers are placed on a continuum from healthy to vulnerable.