Abstract
In a recent international survey, US consumers were the most likely to have "no spare cash". This would suggest that Americans, more than any other nationality, are likely to need a loan when encountering an unexpected expense. In fact, when Americans in the same survey were asked how they spend the spare cash they do have, 37% said they use it to "pay off debts, credit cards and loans." While it is unclear how much this lack of spare cash is due to spending or paying off previous loans, the fact remains that Americans are the most likely to need to borrow for future needs.
While it appears that the market for loans will increase, unsecured loans are not consumers only option. The interest rates on the credit cards may or may not be better than those on unsecured loans, but they may have other attractive rewards programs or other benefits. Home equity loans tend to have lower interest rates than unsecured loans (Bankrate cites a 7.99% APR average for a $30,000 loan in September 2005, while the Federal Reserve cites over 12% for a 24-month personal loan. Payday loans are also a popular option, with loans usually at $500 or less. In a 2001 survey of payday loan customers, 66% used the loans for unexpected expenses or temporary reduction in income.
In this report, Mintel clearly identifies the principal external factors driving or curtailing growth in unsecured loans. Exclusive consumer research reveals consumer attitudes and behavior toward loans, broken down by demographic characteristics. Six years of specific sales data provide a factual and impartial presentation of the market as a whole.
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