Personal Loan Rates and Debt Statistics in 2022

Personal loan rates hold steady amid federal funds rate hikes while personal loan balances climb to record highs.
Last updated on Aug 29, 2022

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Personal loans accounted for $192 billion in consumer debt in the second quarter of 2022, a $46 billion increase from the same quarter in 2021, according to credit bureau TransUnion

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Personal loans are usually unsecured, meaning they don’t require collateral like a house or a car, and you can use them for almost anything. Lenders rely on loan applicants’ creditworthiness, income and level of debt to qualify them and determine the annual percentage rate.

Public data on these loans is unusually sparse compared with mortgages and student loans, but some credit agencies track information on personal loan debt. The data below shows how that debt has changed over time.

Key facts

  • Total personal loan balances reached $192 billion in the second quarter of 2022, up 31% from the same time in 2021, according to TransUnion. Individual borrowers are also borrowing more, with the average new loan amount reaching $8,085.

  • New personal loans are focused on bad-credit, or subprime, borrowers. Originations among subprime borrowers increased 71% in the first quarter of 2022 from a year before, according to TransUnion.

  • Record-breaking inflation coupled with lenders’ recent interest in bad-credit borrowers has pushed delinquency rates up to 3.37%.

  • The baby boomer generation holds the highest average personal loan debt, according to Experian. Generation Z and millennials are catching up as average personal loan debt is rising more quickly with younger consumers.

  • Despite hikes in the federal funds rate, bank and credit union personal loan rates have remained steady in the first half of the year, according to government data. Lenders sometimes tighten their borrower requirements before, or instead of, increasing APRs.

Average personal loan rates

Personal loan rates aren’t heavily affected by small economic changes, like when the Federal Reserve increases interest rates. Lenders react to significant shifts in the economy by tightening and loosening qualification criteria.

Average personal loan interest rates differ across online lenders, banks and credit unions, in part because they target different borrowers.

Online loans

Online loan rates range from about 5.99% to 35.99%. An online lender may cater to a specific audience — like bad-credit borrowers or those who want to consolidate debt — which can influence the rates it offers.

Bank loans

The average APR for a two-year bank loan is 8.73%, according to data from the Fed

The Federal Reserve. Consumer Credit Outstanding for June 2022. Accessed Aug 16, 2022.
. Large banks prefer borrowers with good or excellent credit (690 or higher), and some banks offer perks or rate discounts to existing customers.

Credit union loans

The average APR on a three-year credit union loan is 8.84%, according to the National Credit Union Administration

National Credit Union Administration. Credit Union and Bank Rates 2022 Q2. Accessed Aug 16, 2022.
. Federal credit unions cap APRs at 18%, so their rates skew lower than other lenders. A credit union may look beyond a personal loan applicant’s credit profile and consider their standing as a member, helping those with fair or bad credit (below 689) qualify.

Average personal loan size

The average new personal loan was $8,085 in the second quarter of 2022, according to a credit industry report from TransUnion. Average loan amounts have fluctuated between $6,600 and $7,100 in previous years.

Total personal loan debt in the U.S.

Total personal loan debt in the U.S. has grown steadily over the past several years with the exception of 2020. (Read how COVID-19 affected personal loans below.)

Personal loan delinquency rates

According to TransUnion, 3.37% of personal loan borrowers were late on their personal loan payments by 60 days or more in the second quarter of 2022. Many lenders have hardship policies to help borrowers avoid defaulting. Lenders usually don’t report a loan in hardship as delinquent to the credit bureaus.

Who gets personal loans

Personal loan debt by state

In 2022, credit bureau Experian released an analysis of credit report data that breaks down personal loan debt by state. The data shows that in 2021 more debt was concentrated in the northern Midwest and Pacific Northwest than on the East Coast.

A state’s average personal loan debt could be affected by things like cost of living and loan purpose. Even a small number of very large loans could throw the average off.

Personal loan debt by generation

Baby boomers have the highest average amount of personal loan debt, but it’s growing fastest among Millennials and Generation Z, according to a 2022 report from Experian.

Unlike the average new personal loan balance, average personal loan debt can include more than one personal loan and isn’t necessarily new.

Here’s how much average personal loan debt each generation has, according to the credit bureau’s report.

  • Generation Z (18 - 24): $6,658.

  • Millennials (25 - 40): $13,418.

  • Generation X (41 - 56): $18,922.

  • Baby boomers (57 - 75): $20,370.

The personal loan amount you qualify for is tied to your income and creditworthiness. As Gen Zers increase their income and build their credit, their personal loan balances may also rise.

  • Buy now, pay later, the at-checkout financing that lets consumers split a purchase into smaller installments, has grown rapidly since the pandemic began. The trend started at companies like Affirm and Klarna, but credit card issuers, banks and online lenders have hopped aboard. In late 2021, the Consumer Financial Protection Bureau announced plans to investigate the industry, citing concerns about lacking transparency and protections from some BNPL companies and the potential for consumers to overspend.

  • Earned wage access companies have gained momentum since the pandemic began. These companies let consumers borrow from their expected paycheck. The advances are commonly offered two ways: through your employer using a third-party company, or through a cash advance app that you download. Cash advance apps aren’t regulated like payday loans, but consumer advocates say they can be harmful to your finances in the same ways.

How has COVID-19 affected personal loans?

The economic uncertainty caused by COVID-19 initially caused lenders to tighten their borrowing standards and focus underwriting efforts on confirming employment and income. At the same time, borrowers’ desire to get new unsecured debt dropped.

But lenders turned a corner in late 2020, loosening their standards and looking to attract new borrowers. Lenders primarily set their sights on borrowers with lower credit scores in late 2020 and early 2021, with loan originations from subprime borrowers increasing 71% in the first quarter of 2021, according to TransUnion. Record-breaking inflation in 2022 has been toughest on bad-credit and financially strained consumers, leading to increased personal loan delinquency rates.

Key terms to know about personal loans

Annual percentage rate is the interest rate on your loan plus all fees, calculated on an annual basis and expressed as a percentage. Use the APR to compare loan costs from multiple lenders.

An origination fee is a one-time, upfront fee that some lenders charge for processing a loan. The fee can range from 1% to 10% of the loan amount, and lenders typically deduct it from your loan proceeds.

The debt-to-income ratio divides your total monthly debt payments by your gross monthly income, giving you a percentage. Lenders use DTI — along with credit history and other factors — to evaluate a borrower's financial ability to repay a loan.

Lenders that offer pre-qualification typically do so using a soft credit check, which allows you to see rates and terms you qualify for without affecting your credit score. If you accept the loan offer, the lender will perform a hard check to confirm your information. Hard checks knock a few points off your credit score.

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