Lending Expert Projects Record Demand for Personal Loans in 2019

FreedomPlus® exec urges consumers to use loans for debt consolidation, plan for potential recession


As personal loan balances and originations soar, lending expert Joe Toms projects demand for the loans to hit record levels in 2019 - a smart move for consumers in an economy that could be changing.

"In 2019, we expect even greater personal loan demand, as consumers look to tackle their burgeoning debt loads," says Toms, president of FreedomPlus®, a leading personal loan lender and part of the Freedom Financial Network® family of companies. "As we are in the late innings of the economic expansion, with consumer debt at an all-time high, it is prudent for consumers to plan for a potential recession ahead. A personal loan may help them get their financial affairs into a better place before things get tougher."

At the end of the third quarter, personal loan balances reached a record-high $132.4 billion, an increase of 18 percent from the previous year, and $20 billion more than the end of Q3 2017. Personal loan originations also grew at an annual rate of more than 20 percent for the third consecutive quarter, growing 23 percent year-over-year in the third quarter of 2018. (1)

While consumers are using personal loans for everything from home improvement projects to weddings, debt consolidation is the most common use, says Toms. "The reasons are simple," he explains. "Using a personal loan to consolidate debt simplifies the number of monthly bills to be paid, and can save a tremendous amount on total interest paid." Using a personal loan as a debt consolidation loan also introduces financial discipline, he says, with definitive schedules and timelines for repayment.

Toms urges consumers to take the following steps when evaluating use of a personal loan to consolidate and pay off credit card debt.

1. Research options. In the past, only traditional financial institutions - banks and credit unions - offered personal loans. Today, independent financial companies serve as strong competitors to these traditional lenders, with more than 30 percent of all new personal loans originating from independent, online lenders. (2)

2. Seek options even with sub-prime credit. It is always in consumers’ interest to improve credit profiles, says Toms, as excellent credit affords the best interest rates. However, excellent credit is not required to qualify for a personal loan. Subprime originations have been growing at the fastest rate of all personal loan originations, increasing 28 percent between the second quarter of 2017 and the second quarter of 2018. (3) According to Toms, roughly a quarter of FreedomPlus borrowers have sub-prime FICO scores. "An individual is more than a credit score," he says. "As an independent lender, FreedomPlus can look at factors such as income stability, overall debt-to-income ratio and savings. We even offer interest rate discounts in several scenarios, such as for a consumer who has accumulated retirement savings."

3. Consider a personal loan to consolidate larger amounts of credit card debt. Personal loans are not limited to small dollar amounts, says Toms. Loan amounts can be as low as $1,000 and as high as $100,000, depending on the lender. At FreedomPlus, 25 percent of borrowers have taken out loans between $25,000 and $35,000.

"The time to pay off debt is now," says Toms. Daniel Cohen, managing editor of Bills.comⓇ, another member of the Freedom Financial Network, agrees. "The amount of credit issued is at an all-time high, and credit requirements are as relaxed as any time in the past 10 years. It is an excellent time for consumers who would benefit from a debt consolidation loan to act, before a correction in the market prevents them from doing so."

Bills.com (http://www.bills.com)

Bills.com and FreedomPlus are part of the Freedom Financial Network, a family of companies whose products and services provide innovative solutions that empower people to live healthier financial lives. The Bills.com resource site provides simple tips, advice and tools - including the Bills.com debt relief calculator - to help consumers make smart financial decisions. FreedomPlus tailors personal loans to each borrower with a level of customer service unmatched in the industry. NerdWallet has recognized FreedomPlus among the Best Personal Loans for Good Credit and Debt Consolidation in its 2018 Best-of Awards Program.

Headquartered in San Mateo, California, Freedom Financial Network also operates an office in Tempe, Arizona, and employs more than 2,200. The company has been voted one of the best places to work in both the San Francisco Bay area and the Phoenix area for several years.

(1) https://newsroom.transunion.com/lenders-extending-more-loans-to-subprime-consumers--as-credit-market-continues-to-exhibit-signs-of-strength/

(2) https://www.experian.com/blogs/ask-experian/personal-loans-are-the-fastest-growing-consumer-debt/

(3) https://newsroom.transunion.com/lenders-extending-more-loans-to-subprime-consumers--as-credit-market-continues-to-exhibit-signs-of-strength/

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