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The coronavirus pandemic has had surprising effects on people’s borrowing habits, including a sharp jump in the share of borrowers seeking personal loans to purchase boats, motorcycles, and recreational vehicles.
There’s even been an uptick in interest in personal loans for cosmetic surgery, according to an analysis of a representative sample of nearly 800,000 personal loan rate requests submitted to the Credible marketplace in 2020.
Since the coronavirus pandemic was declared a national emergency on March 13, the share of borrowers seeking loans for many discretionary purposes has jumped dramatically. Those loan purposes include:
- Boat: +355%
- Motorcycle: +257%
- Recreational vehicle: +181%
- Cosmetic procedure: +67%
See: 4 Ways to Get a Loan for a Motorcycle
More people are planning to get married, but not right now
The data revealed another fascinating tidbit: More people seem to be planning to get married, but it may be that the wedding ceremonies themselves are being postponed.
The share of borrowers intending to buy an engagement ring with a personal loan was up 15% after March 13, but the share who planned to use a loan to finance a wedding dropped by 25%.
The share of inquiries for personal loans to help pay for the birth or adoption of a child were also up 43% — perhaps reflecting plans made before the pandemic. Most children conceived during the pandemic won’t arrive until 2021.
There was increased interest in borrowing for several other types of purchases that often reflect more urgent needs, including:
- Home improvement: +64%
- Business: +60%
- Major purchases (such as appliances): +52%
- Car financing: +31%
Check out:
- Everything You Need to Know About Financing an Engagement Ring
- 13 Adoption Loans and Grants to Consider
Most popular reasons for taking out personal loans
Although the share of borrowers who are interested in taking out personal loans for discretionary purposes is up, those purposes still represent only a small portion of personal loan inquiries.
Before the pandemic was declared a national emergency on March 13, the top loan purposes stated by borrowers seeking personal loan rates were:
- Debt consolidation: 41.9%
- Credit card refinancing: 20.1%
- Major purchase: 8.8%
Those remain the top three loan purposes stated by borrowers who are interested in taking out personal loans, with half of all rate requests received since March 13 tied to credit card refinancing or debt consolidation.
The wide “spread” between interest rates on credit cards and personal loans makes consolidating credit card debt with a personal loan an increasingly popular strategy for paying off debt.
Since March 13, there’s been a 14% increase in the share of personal loan inquiries for credit card refinancing.
| Loan purpose | Share of rate requests Jan. 1 - March 13 | Share of rate requests March 14 - Aug. 26 | Change before and after March 13 |
|---|---|---|---|
| Debt consolidation | 41.92% | 27.13% | -35% |
| Credit card refinancing | 20.08% | 22.94% | +14% |
| Major purchase | 8.81% | 13.36% | +52% |
| Other | 6.66% | 7.01% | +5% |
| Home improvement | 6.40% | 10.50% | +64% |
| Medical expenses | 3.41% | 3.25% | -5% |
| Moving relocation | 3.1% | 3.52% | +14% |
| Car financing | 2.54% | 3.34% | +31% |
| Business | 2.20% | 3.52% | +60% |
| Special occasion | 1.64% | 1.38% | -16% |
| Wedding | 0.78% | 0.58% | -25% |
| Home buying | 0.62% | 0.80% | +30% |
| Vacation | 0.48% | 0.28% | -43% |
| Taxes | 0.45% | 0.33% | -26% |
| Motorcycle | 0.21% | 0.74% | +257% |
| Baby or adoption | 0.20% | 0.29% | +43% |
| Cosmetic procedure | 0.13% | 0.22% | +67% |
| Green loan | 0.12% | 0.11% | -3% |
| RV | 0.10% | 0.28% | +181% |
| Boat | 0.07% | 0.34% | +355% |
| Engagement ring | 0.07% | 0.08% | +15% |
Methodology: Analysis of a representative sample of nearly 800,000 personal loan rate requests submitted by borrowers to the Credible personal loan marketplace from Jan. 1 through Aug. 26, 2020.
Keep Reading: 5 Moving Loans for Relocation Expenses
About Credible
Credible is a multi-lender marketplace that empowers consumers to discover financial products that are the best fit for their unique circumstances. Credible’s integrations with leading lenders and credit bureaus allow consumers to quickly compare accurate, personalized loan options ― without putting their personal information at risk or affecting their credit score. The Credible marketplace provides an unrivaled customer experience, as reflected by over 3,700 positive Trustpilot reviews and a TrustScore of 4.7/5.
