Personal Loan Rates and Debt Statistics in 2022

Average rates continue to decline and total personal loan debt surpasses pre-pandemic levels.
Mar 2, 2022

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Personal loans accounted for $167 billion in consumer debt in the fourth quarter of 2021, an increase from the same period in 2020, according to credit bureau TransUnion.

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.

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 9.09%, according to data from the Fed. Large banks prefer borrowers with good or excellent credit (690 FICO 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 8.83%, according to the National Credit Union Administration. 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 FICO) qualify.

Where to find a personal loan

Banks and credit unions used to be the go-to lenders for personal loans, but online lenders have caught up fast. Financial technology companies (online lenders) accounted for 49% of the personal loan market in 2019, according to a study from credit bureau Experian. Four years earlier, fintechs originated 22% of new personal loans.

Consumer credit profiles at traditional and online lenders

Credit score band (VantageScore)

Percent of borrowers with traditional loans

Percent of borrowers with online loans

Super prime (781 - 850)

6.8%.

5.5%.

Prime (661 - 780)

35.9%.

35.3%.

Near prime (601 - 660)

27.8%.

33.6%.

Subprime (500 - 600)

26.5%.

24.6%.

Deep subprime (300 - 499)

2.9%.

1%.

Source: Experian

Average personal loan size

The average new personal loan was $7,104 in the fourth quarter of 2021, according to a credit industry report from TransUnion. Average loan amounts have fluctuated between $5,000 and $7,500 in recent 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% of personal loan borrowers are late on their personal loan payments by 60 days or more. 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 2021, credit bureau Experian released an analysis of credit report data that breaks down personal loan debt by state. The data shows that in 2020 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 Generation Z, according to a 2021 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 -23): $6,004.

  • Millennials (24 - 39): $12,306.

  • Generation X (40 - 55): $17,773.

  • Baby boomers (56 - 74): $19,700.

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

  • 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.

  • Interest rate caps that aim to eliminate high-interest consumer lending have been implemented in 19 states, plus Washington, D.C. Federal legislation that aims to cap consumer loan rates at 36% in all states was also reintroduced. Setting a federal maximum interest rate could bar payday lending once and for all.

  • 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. Interest from borrowers started to return in spring 2021. Last year’s total personal loan debt surpassed pre-pandemic levels.

Key terms to know about personal loans

Annual percentage rate

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.

Origination fee

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.

Debt-to-income ratio

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.

Soft credit check

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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