Report: Personal Loans Help 36M Paycheck-To-Paycheck Consumers Stay Afloat

Sometimes, money is good – and sometimes, just getting bills paid at the end of the month can be a struggle. For consumers struggling to make ends meet, taking out a personal loan can be an important step to getting their financial lives back on track.

Personal loans have become a mainstream financial tool in the United State s – one used by as many as 24 percent of all U.S. consumers, in fact. They are even more popular among consumers shouldering heavy financial responsibilities, whether it is hefty mortgage payments, children or unforeseen expenses.

With so many factors that might have consumers rethinking their personal finances, it is difficult to know exactly which one will eventually drive the decision to take out a loan. What – if anything – do loan users have in common?

This is only one of the questions PYMNTS, in collaboration with Lending Club, set out to answer in the September edition of Reality Check: The Paycheck-To-Paycheck Report. We surveyed a census-balanced panel of 2,371 U.S. consumers about whether they had taken out personal loans and about why they decided to learn more about the financial circumstances that drive loan usage.

Our research shows that although consumers of all fi nancial backgrounds take out personal loans, doing so is especially common among those living paycheck to paycheck. Fifty-four percent of all consumers living paycheck to paycheck say they have taken out at least one personal loan, in fact, compared to 46 percent of those not living paycheck to paycheck who have done the same.

Living paycheck to paycheck alone is often not the deciding factor driving consumers to seek out personal loans, however. The amount of funds they have in savings also plays a part. Fifty-three percent of consumers who have taken out personal loans say that they have less than $2,500 in savings and therefore might struggle to manage unforeseen expenses, should they arise.

The decision to take out personal loans often depends on many other factors, as well, including whether or not consumers have children, their ages and the share of their income they spend on housing. The September edition of The Reality Check: The Paycheck-To-Paycheck report details the impact these and many other variables have on consumers’ decision to seek out financial assistance, in the form of personal loans.

To learn more about the decision-making process that consumers consider when taking out personal loans and other financial products, download the report.