Higher savings rates and changing spending patterns drove down unsecured personal lending in 2020, even as other consumer lending in other categories rose.
Total balances of unsecured personal loans fell 8% year over year to $148 billion in the fourth quarter of 2020, TransUnion said in a consumer credit report released Thursday. The number of unsecured personal loans also decreased 9% to 21.2 million nationwide over the same period. The figures exclude point-of-sale loans.
Unsecured personal lending, which was surging until the pandemic, took a hit at the end of 2020 as consumers continued to stay home, save money and pay down credit card balances. Stimulus payments and assistance programs helped keep delinquency rates low, although it’s hard to know now how low they will stay. Experts say it’s unlikely that demand for the product will bounce back until daily life returns to something closer to normal.
Lenders pulled back from unsecured lending “pretty dramatically” in the early days of the pandemic, said Liz Pagel, consumer lending business leader at TransUnion. While some, especially online lenders, are returning