Personal loans are on the rise—not just in how many people are getting them, but in how much people are borrowing. The amount of funding offered as part of a personal loan can vary wildly depending on the borrower. Americans averaged around $11,548 in personal loan balances as of the second quarter (Q2) of 2023.
Key Takeaways
- The average personal loan amount in America was $11,548 in the second quarter of 2023.
- There were over 22.7 million consumers with unsecured personal loans in Q2 2023.
- The average interest rate in Q2 is 11.48%.
Average Personal Loan Balance
The average balance of unsecured personal loans in the United States was $11,548 in the second quarter of 2023, according to an August 2023 report from TransUnion. This is up from $10,344 during the same time a year prior. The average balance was much lower in Q2 2020, at $8,895.
Serious borrower delinquency (i.e., loans that are more than 60 days past due) dropped from a decade-high of 4.14% in Q4 2022 to 3.62%
Average Personal Loan Rates
Interest rates for personal loans shift as the economy changes. Although interest rates aren’t directly impacted by the Federal Reserve, federal funds rate increases can affect the economy, which can lead to personal loan rate increases. The national average on a personal loan was 11.48% in Q2 2023, according to the Fed.
Average Personal Loan Balance by State
Per a 2023 report from Experian, each state experienced an increase in its average personal loan balance in 2022 compared to the year prior. Hawaii had the biggest one, with its average personal loan balance rising 20.1% year over year (YOY). The District of Columbia experienced the smallest bump, up by just 0.1% in the same time frame.
In terms of the actual amount of debt, Washington state had the highest average personal loan balance at $30,648, though this only represented a 2.2% YOY growth since 2021. Conversely, Georgia had a much smaller average, at $14,838, while its increase from the previous year was much higher, at 10.2%.
How Do People Use Personal Loans?
Investopedia commissioned a national survey of 962 U.S. adults between Aug. 14, 2023, to Sept. 15, 2023, who had taken out a personal loan to learn how they used their loan proceeds and how they might use future personal loans. Debt consolidation was the most common reason people borrowed money, followed by home improvement and other large expenditures.
What Can People Use a Personal Loan for?
You can use a personal loan for almost anything. For instance, you may need some cash to cover an emergency, such as an unexpected home repair, medical bill, or car maintenance. Some borrowers use personal loans to fund major expenses, including moving, adoption, or weddings. However, most lenders typically won’t authorize a personal loan for education expenses.
What Is a Good Rate for a Personal Loan?
Interest rates vary based on your credit history, how much you want to borrow, your potential lender, and more. Right now, the national average interest rate for unsecured personal loans is nearly 11.5%. If you can find an interest rate that’s below the national average, then you know you’ve found a good rate for a personal loan.
Can You Pay Off a Personal Loan Early?
Most lenders typically won’t penalize you for paying off your loan early unless you pay it off very soon after it originated. In most cases, you can pay off your loan before the final payment is due without incurring any extra charges or fees.
Does a Personal Loan Hurt Your Credit Score?
Completing a loan application can cause your credit score to take a temporary dip, as your lender will conduct a hard inquiry to obtain your credit report. Your score will typically rebound after a couple of months. If you miss a payment or fall behind on what you owe, that could hurt your credit score as well. If you miss enough payments and default on your loan, you will have a harder time borrowing money in the future.
Where Can You Get a Personal Loan?
Personal loans are available from many types of banks, including global financial institutions and local community banks. You can also check your local credit unions, even if you aren’t a member. Compare those terms and rates with online lenders to see which one would offer you the lowest interest rate, fewest fees, and repayment terms suited to your budget.
If available, see if you can get pre-qualified for a personal loan. This won’t hurt your credit score, and it will give you an idea of how likely you are to be approved for a loan.
The Bottom Line
The number of people taking out new unsecured personal loans has been on the rise over the past three years, as has the average personal loan balance in the U.S. While this isn’t a surprise, given the wide variety of uses that personal loans have for those in need of funding, it remains to be seen if this growth will continue next year.
FAQs
Personal Loan Balances by State
TransUnion reports that the average personal loan balance is roughly $11,500, but for new accounts, the balance is lower at around $7,800. We compared how average new account balances for personal loans vary by state.
What is normal personal loan? ›
Personal Loan is an unsecured credit provided by financial institutions based on criteria like employment history, repayment capacity, income level, profession and credit history. Personal Loan, which is also known as a consumer loan is a multi-purpose loan, which you can use to meet any of your immediate needs.
What is the typical maximum personal loan amount? ›
While some lenders allow you to borrow up to $100,000, others offer loans only up to $20,000. Most base your maximum loan amount on financial factors, like your annual income, your credit score and your repayment history.
What is an average loan? ›
The average personal loan amount in America was $11,548 in the second quarter of 2023. There were over 22.7 million consumers with unsecured personal loans in Q2 2023. 1. The average interest rate in Q2 is 11.48%.
Is it hard to get a $10,000 personal loan? ›
Generally, you need a good to excellent credit score of 670 or above to qualify for a $10,000 loan. However, some lenders specialize in working with borrowers with fair or poor credit.
What credit score do you need for a personal loan? ›
Payment history is weighed the most heavily in determining your credit score, along with your total outstanding debt. Generally, borrowers need a credit score of at least 610 to 640 to even qualify for a personal loan. To qualify for a lender's lowest interest rate, borrowers typically need a score of at least 800.
Which bank gives a personal loan easily? ›
HDFC Bank customers can get Personal Loans with minimal or no documentation. In fact, if they are pre- approved for a Personal Loan, they can easily apply for it. Lower interest rates: Interest rates on Personal Loans are lower than other sources.
What is the minimum loan on a personal loan? ›
The minimum personal loan amount is usually £1,000. Personal loans might have higher interest rates compared to other borrowing options. The interest rate advertised isn't necessarily the one you'll receive.
What is considered a large personal loan? ›
To another, it might be $100,000. But typically, it's a number that's well into the five-figures realm. A large personal loan is a form of credit that can be used to make large purchases or consolidate other high-interest debts.
How much can I borrow with a 700 credit score? ›
You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
Stringent Eligibility Requirements: Obtaining a $30,000 personal loan often comes with strict eligibility criteria, including high credit score requirements and stable income verification. This can be a significant barrier for those with average or below-average credit histories, limiting access to such loans.
What is a good amount to borrow? ›
There is no one-size-fits-all number when it comes to borrowing power. Generally, it may be a good idea to ensure your home loan repayments don't exceed 30% of your gross income.
What is considered a good loan? ›
In addition, "good" debt can be a loan used to finance something that will offer a good return on the investment. Examples of good debt may include: Your mortgage. You borrow money to pay for a home in hopes that by the time your mortgage is paid off, your home will be worth more.
How much can the average person borrow in the bank? ›
Personal loan amounts generally range from as low as $1,000 to as high as $100,000. The exact range varies from lender to lender. For example, among the best personal loan lenders, there are lenders that offer loans from $1,000 to $50,000, $2,000 to $30,000, and $5,000 to $100,000.
How much would a $5000 loan cost per month? ›
Based on the OneMain personal loan calculator, a $5,000 loan with a 25% APR and a 60-month term length would be $147 per month. The loan terms you receive will depend on your credit profile, including credit history, income, debts and if you secure it with collateral like a car or truck.
What's the average payment on a $10000 personal loan? ›
Here's how much you'd pay each month for a $10,000 personal loan
| 8.00% |
|---|
| Two-Year Repayment | $452.27/month, $854.55 in interest over time |
| Five-Year Repayment | $202.76/month, $2,165.84 in interest over time |
| Seven-Year Repayment | $155.86/month, $3,092.42 in interest over time |
Jan 17, 2024
You will almost certainly have no problems qualifying for a $5,000 personal loan if you have a strong income and good credit. However, you may struggle to get approved if your income is inconsistent, you have a low credit score, or you have a considerable amount of debt already.
Is it easy to get a $5,000 personal loan? ›
A personal loan for $5,000 can be relatively easy to find since they often range from $1,000 to $100,000 or more. Loans in this range, like with all personal loans, can be used for just about anything from covering emergency expenses, consolidating high-interest credit card debt or even funding home improvements.
