Personal loans increase nearly 100% during pandemic
Asset finance aggregator Platform Finance noted nearly 100% growth in personal loans in the first quarter of FY22 compared to the first quarter of FY21, with home renovations and debt consolidation being the main drivers of this increase.
Ryan Young, CEO of Platform Finance, said demand for personal loans took off between August and October 2020 when people began to face the reality of the pandemic.
“Once the initial pandemic shock wore off and people realized they weren’t going to travel for a while, attention quickly shifted to repairing houses and paying down debt. “Young said.
Home renovations made up 23% of personal loans in the third quarter of 2021, while debt consolidation followed closely behind at 21%, according to figures from Latitude, Platform Finance’s panel of lenders.
Apart from that, Damian Mantini, director of aggregation and strategic partnerships at Platform Finance, also attributed the increase to greater interest from lenders in personal loans and the low interest rates offered to profiles of funders. strong credit.
This especially applies to major lenders with credit scores above 850, who quickly took advantage of lower rates to increase their flexibility.
“Risk-based credit scores mean that we are seeing rates in some cases below 6%, which is a huge plus for borrowers,” Young said. “Personal loans are a great alternative and there are many cases where they are easier than a secured asset loan for certain types of assets and also a better option than, say, a buy-it-now product or a subsequent payment or use of your credit card. “
Platform Finance has six lenders in its personal finance panel, namely Latitude, Wisr, MoneyPlace, NOW Finance, SocietyOne, and Plenti, but is always looking for more to help mortgage and asset finance brokers get into the big picture. personal loans.
“The diversity of funding is crucial; having the choice to meet customer needs is essential, ”said Young. “We welcome brokers at all levels – from those new to the personal lending space to those who specialize in this area or are able to add it as added value for their clients. “
Young believes that growth will continue to skyrocket well beyond the post-pandemic recovery, as low rates on blue chip bonds will certainly attract new clients for brokers. Tension in supply chains also indicates strong pent-up demand for goods and services.
“Before the pandemic there were negative perceptions around this industry, but there has been a major transformation and personal loans are now more and more common,” Mantini said. “The stigma surrounding personal loans is gone. “