Unsecured Loan Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028F

The global unsecured loan market is expected to experience substantial growth in the forecast period due to its streamlined application process, absence of collateral requirements, and prompt disbursement rate. Loans, provided by banks and other financial institutions, entail repayment of the borrowed amount along with a predetermined interest rate on a monthly basis. The monthly payment made to the lender, encompassing both principal and interest, is referred to as Equated Monthly Installment (EMI). Unsecured loans, often referred to as signature loans, are not backed by any underlying collateral. A significant majority of borrowers (57.6%) utilize personal loans to refinance credit card debt or consolidate existing debts, while home renovations rank second (5.8%) in terms of loan purpose. The terms and conditions of unsecured loans, including approval, sanction, and distribution, are frequently influenced by the borrower's credit score. Some unsecured loan products necessitate a high credit score for approval, while others may require a cosigner to assume responsibility for debt repayment in the event of borrower default. In 2022, the United States is witnessing unprecedented levels of personal loan debt. The average balance per loan of unsecured personal loans held by Americans is USD9,896, with a total balance amounting to USD177.9 billion.

An unsecured loan offers the convenience of repaying a smaller loan amount within a shorter time frame. The loan amount and duration can be tailored based on the intended purpose. Due to the reduced loan amount and shorter term, borrowers can efficiently settle debts and allocate funds from alternate sources to cover the loan repayment.

The application process for unsecured loans is simple and expedited, in contrast to secured loans. Financial institutions meticulously review each loan application, including secured and unsecured loans, as well as other financing options such as business lines of credit, merchant cash advances, and invoice finance. However, secured loans require thorough evaluation of provided collateral to determine its value, which can be time-consuming. On the other hand, the application and approval processes for unsecured loans are streamlined and prompt. The loan amount is disbursed within a few days. As a result, the unsecured loan market is expected to exhibit faster-than-average growth, driven by the increasing demand for its swift application process.

The absence of collateral requirements is poised to further boost market growth. Many businesses necessitate collateral to secure loans. Startups, for instance, may lack valuable company assets to offer as collateral, rendering them ineligible for most secured business loans. Consequently, factors like business strategy and market potential are considered during the assessment of a company. Unsecured business loans provide an opportunity for startups and asset-limited enterprises to obtain financing. In the first quarter of 2022, the number of Americans with personal loans reached 20.4 million, up from 19.9 million the previous year. Despite the increase in personal loan debt, the number of borrowers decreased from 20.8 million at the end of 2019. Individuals lacking the necessary equity to secure loans can benefit from unsecured loans, as they provide access to funds for purposes beyond asset acquisition. This borrowing method allows borrowers to quickly address credit card balances and close other outstanding loans. Consequently, the unsecured loan market is anticipated to expand due to the non-requirement of collateral.

The market for personal loans has experienced growth attributed to the adoption of advanced technologies such as Chatbots, IoT, AI, and big data analytics. Platforms like Zopa, Prosper, and Lending Club facilitate person-to-person lending for personal loans, offering credit cards, fixed-term savings accounts, and access to loans from various lenders or investors. These platforms enable customers to conveniently apply for loans from the comfort of their homes. Additionally, as digitalization continues to advance, providers of unsecured loans are investing in customer interactions through digital and voice-activated assistants. Chatbot software programs are increasingly used by businesses offering unsecured loans to deliver personalized and user-friendly experiences for clients. Technological advancements have also spurred the development of innovative unsecured loan schemes. Therefore, the potential for technological advancements is limitless, paving the way for profitable opportunities in the expansion of the unsecured loans market.

Market Segmentation

The Unsecured Loan Market is segmented based on type, provider type, interest rate, tenure, region and competitive landscape. Based on type, the market is segmented into personal loan, education loan, credit card loan, agricultural loan, home improvement loan and others (short term business loan, consumer durable loan, etc.). The market is further divided into bank, non-banking financial companies, others (fintech companies), based on provider type. On the basis of interest rate, the market is segmented into fixed and floating. Based on tenure, the market is fragmented into less than 3 years, 3-5 years, and more than 5 years. On the basis of region, the market is segmented into North America, Europe, Asia-Pacific, Middle East & Africa and South America.

Company Profiles

Bank of America Corporation, Citigroup, Inc., Wells Fargo & Co., U.S. Bancorp, PNC Financial Services Group, Inc., American Express Company, Ally Financial Inc., Truist Financial Corporation, Bank of China and HDFC Bank Ltd. are among the major market players in the global unsecured loan market.

Report Scope

In this report, the global unsecured loan market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

Global Unsecured Loan Market, by Type:

• Personal Loan
• Education Loan
• Credit Card Loan
• Agricultural Loan
• Home Improvement Loan
• Others

Global Unsecured Loan Market, by Provider Type:

• Banks
• Non-Banking Financial Companies
• Others

Global Unsecured Loan Market, by Interest Rate:

• Fixed
• Floating

Global Unsecured Loan Market, by Tenure:

• Less than 3 Years
• 3-5 Years
• More than 5 Years

Global Unsecured Loan Market, by Region:

• North America
• Europe
• Asia-Pacific
• Middle East & Africa
• South America

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the global unsecured loan market.

Available Customizations

The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.