How personal loans help consumers stay afloat

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

Personal loans have become a common financial tool in the United Statess – one used by up to 24 percent of all US consumers, in fact. They are even more popular among consumers who take on heavy financial responsibilities, whether it’s high mortgage payments, children, or unexpected expenses.

With so many factors that could cause consumers to rethink their personal finances, it’s hard to know exactly which one will eventually lead to the decision to take out a loan. What, if any, do loan users have in common?

This is just one of the questions from PYMNTS, in collaboration with Loan Club, decided to respond in the September edition of Reality Check: the paycheck to paycheck report. We surveyed a balanced panel of 2,371 US consumers to find out if they had taken out personal loans and why they decided to learn more about the financial circumstances behind the use of the loans.

Our research shows that although consumers of all fithe financial community takes out personal loans, which is particularly common among those who live paycheck to paycheck. Fifty-four percent of all consumers living paycheck to paycheck report having taken out at least one personal loan, in fact, compared with 46% of those not living paycheck to paycheck. other who have done the same.

However, living paycheck to paycheck is often not the deciding factor that drives consumers to seek personal loans. The amount of funds they have in savings also plays a role. Fifty-three percent of consumers who have taken out personal loans report having less than $ 2,500 in savings and therefore may find it difficult to manage unforeseen expenses, if they arise.

The decision to take out personal loans often depends on many other factors, thus, 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 details the impact of these variables and many more on consumers’ decision to seek financial assistance, in the form of personal loans.

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

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