Studying the Preferences of Americans in Taking Loans: The Results of Surveys

• Reasons That Force People to Search For Additional Sources of Money
• Rapid Growth in Demand for Taking out Loans
• The Preferences of Americans in Taking Loans
• Average Portrait of a Person Who Takes a Loan
• Defining an Ideal Sum of Taking a Loan
• Summary

In 2024, a number of studies were done to identify both the main reasons why people resort to taking loans and to describe the main reasons why borrowers have difficulties in repaying the amount taken. Another important criterion is the purpose for which loans are taken. The article presents the main results of research in the field of loan taking for the first half of 2024.

Reasons That Force People to Search For Additional Sources of Money

This year there have been examined consumer borrowing trends. The research was made by the Achieve Center for Consumer Insights. All in all, there have been involved 2000 customers. The period of time taken into consideration is 6 months.

One of the parameters of interest to the researchers was the question why do people take out loans?

According to the respondents’ answers, during the last 6 months they needed additional money for the following reasons:

• the effect of inflation on essential goods and services (21%);
• halting wage increases or decreasing wages (20%);
• forgot to pay (11%);
• interest rates increases (5%);
• failures to maintain cash flow (3%);
• unwillingness to pay (2%).

The information has been taken from the Achieve Center for Consumer Insights.

Another important issue is how Americans deal with their credit. Notably, 31% of borrowers have difficulty repaying their loans. Among these 31%, 65% have repayment problems because they initially miscalculated and borrowed too much for their budget. In 27% of cases, payment delays can occur when you have not yet received your paycheck and you already need to make a payment for the loan. If a user has multiple accounts, it is difficult for them to keep track of what is owed on all accounts. This reason accounts for 14% of all debts.

The Achieve Center for Consumer Insights gives more food for thought by making the research on the most paying late or missing payments types of consumer-bill payment priorities. The first place with 24% holds student loans aimed at covering education expenses. The second place holds personal loans with 16%. BNPL together with credit cards round out the top three with 11%. Among other payment priorities there should be mentioned auto loan (9%), utility bills (10%), car insurance (6%) and mobile phone (7%).

The information has been taken from the Achieve Center for Consumer Insights.

Rapid Growth in Demand for Taking out Loans

There have been made on more research which states that since 2017 the number of taken personal loans doubled from $117 billion to $245 billion in the first quarter. In other words these days approximately 23.5 million Americans have loans. The average personal loan debt per borrower is $11,829. Comparing the figure with 2023 it was less and comprised $11,281. Most borrowers (55.1%) take out a personal loan to consolidate debt or refinance credit cards. It should be noted that such approach is considered to be a risky one as taking a loan to cover a previous one is nothing less than a vicious circle of debts.

The information has been taken from   TransUnion and The Wall Street Journal

The Preferences of Americans in Taking Loans

According to https://howmuch.net/articles/why-do-americans-take-out-personal-loans  Americans take out personal loans to cover the following needs:

• 39,2%  – for debt consolidation;
• 21, 8 – credit card refinance;
• 7,7% – home improvement;
• 3,5% – major purchase;
• 3% –  medical expenses;
• 2,7% – moving and relocation;
• 2,3% – travelling;
• 1,7% – car financing;
• 1,7% – wedding financing;
• 1% –  business;
• 0,7%  – home buying;
• 14,9% – other options.

As can be seen from the survey data, the leading position here is debt repayment at the expense of taking a new debt. The item “other” accounts for a fairly large share. This includes absolutely any reason related to an acute need. This could be the sudden death of a relative or the need for rehabilitation after an illness. It should be noted that home repairs account for only 7.7%. However, if such loans are taken out, they may exceed loans for repayment of previous debts. For example, in order to repay a previous debt, an average of $200-300 is borrowed. While you may need $2,000 to $5,000 or even more to renovate your home.

Average Portrait of a Person Who Takes a Loan

Relying on the results of survey https://www.entrepreneurshipinabox.com all Americans who take loans fall into 6 basic categories:

• With No Debt

Citizens who have never taken a loan (29%). They have no debts. It is very likely that if they want to take a loan, they will be approved.

• People who Spend on Credit Cards

They comprise 22%. They have only one debt – a credit card.

• People Who Have a Mortgage Only

They comprise 13%.

• People With auto Loan Only

12% of Americans belong to this group

• Auto Plus Mortgage Loans

9% of respondents have a combination of two types of loans taken.

• Student Loans

4% of respondents have such a loan type.

Defining an Ideal Sum of Taking a Loan

The best advice of course is to rely on your own strength and don’t take out loans. But there are times when you can’t do without them. There is no such thing as an ideal amount for taking out a loan. You are to set it by yourself relying on your needs. If you still need a small amount, consider a 100 dollar loan. It has, from our point of view, a number of advantages:

• minimal risk of failing to pay it off as it is affordable enough;
• it is paid off till the next payday.

There are no limits on what 100 dollar loan can be spent. In the majority of cases it is taken:

• to buy food or clothes;
• to buy a small present;
• for a not rather significant mobile phone repair;
• to buy an item of furniture;
• others.

Summary

And so there has been a surge of interest in loans in recent years. This is due to a number of reasons:

1. shortage of money due to rising inflation and rising cost of prices for goods and services.
2. inability to properly manage their income.
3. lack of a safety cushion in the form of savings.

That’s why it’s increasingly common for Americans to take out loans. Of course, this is not the best option if you have doubts about your abilities. If you want to try to close one of your financial holes you can start with 100 dollar loans. However, this should be your decision without any pressure.