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Personal Loan News: Prosper Press Release Reveals Telling Statistics

[Oct 13, 2009.]

 

For borrowers seeking personal loans, it can be reassuring to discover what other people seeking personal loans are doing and receiving. For example, what people are using unsecured personal loans for, what interest rates they are paying, and how credit score affects interest rates.

Unfortunately, comprehensive statistics about personal loans can be hard to come by. There is not one centralized source of trusted information, as there is with mortgages in the Mortgage Bankers Association.

Therefore, it's worth reading the October 7, 2009 press release from Prosper.com, a popular and growing "peer-to-peer" lending Web site. Peer-to-peer lending means people lending to other people directly.

Personal Loan Statistics That May Surprise Some People

What is the most common use for a personal loan? According to Prosper's statistics, 49 percent of personal loan applicants are seeking a personal loan for the purpose of debt consolidation. This jibes well with the findings of Rebuild.org. Personal loans for debt consolidation are hotter than a Brooklyn July right now.

What is the average interest rate paid by personal loan borrowers? Depends on credit score and perceived creditworthiness. "A" borrowers pay, on average, 10 percent. But "D" borrowers pay more than 25 percent.

Borrowers with bad credit may be able to get better rates on personal loans by searching for a personal lender online, rather than going the peer-to-peer route.

What is the second-most common use for personal loan funds? Business funding, with 16 percent of personal loan borrowers on Prosper.com using proceeds to start or fund a business. This is yet another testament to the bone dry nature of small business lending offered by major banks.

"There Has Never Been a Better Time to Be a Banker"

Chris Larsen, CEO of Prosper.com, states:

"There has never been a better time to be a banker. With credit card companies hiking rates while at the same time reducing credit limits, people with great credit are looking for an alternative way to get rid of their credit debt and finance their small businesses."

Of course Mr. Larsen has a vested interest in that statement being true, but still his argument makes perfect sense. Compared to credit card debt, a fixed rate personal loan looks like a strong choice for many consumers and businesspeople.

There Has Been a Better Time to Be a Borrower, But Now's Not Too Terrible

Nobody says that getting a personal loan is easy these days. However, the situation is not as dire as it was before. Plus, as Mr. Larsen notes above, lenders are seeing profit in personal loans. Especially for big banks that can borrow at zero percent, personal lending is increasingly appealing as a business model.

A continuation of that trend is a win-win for personal lenders and borrowers seeking personal loans.

 

About Author:

Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.

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