Global Unsecured Loan Market Surges as Borrowers Seek Collateral-Free Financing Options

Dublin, Sept. 26, 2023 (GLOBE NEWSWIRE) -- The "Unsecured Loan Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2018-2028F" report has been added to's offering.

The global unsecured loan market is poised for substantial growth in the forecast period due to several key factors. Unsecured loans, also known as signature loans, are financial instruments that do not require collateral. They have gained popularity due to their simplified application process, absence of collateral requirements, and quick disbursement of funds.

Loan Repayment: Borrowers are required to repay the borrowed amount along with a predetermined interest rate on a monthly basis, typically in the form of Equated Monthly Installments (EMI).

Popular Loan Purposes: A significant majority of borrowers (57.6%) utilize personal loans to refinance credit card debt or consolidate existing debts. Home renovations (5.8%) rank second in terms of loan purpose.

Credit Score Influence: 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.

US Personal Loan Debt: 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 USD 9,896, with a total balance amounting to USD 177.9 billion.

Advantages of Unsecured Loans:

Unsecured loans offer several advantages that contribute to their popularity:

  • Tailored Loan Amount: Borrowers can efficiently settle debts and allocate funds from alternate sources to cover the loan repayment due to the reduced loan amount and shorter term.
  • Simple Application Process: Unsecured loans have a streamlined and expedited application and approval process compared to secured loans. The loan amount is disbursed within a few days, making them attractive to borrowers.
  • No Collateral Requirement: Unlike secured loans, unsecured loans do not require collateral. This accessibility makes them suitable for startups and asset-limited businesses.

Technological Advancements in the Unsecured Loan Market:

The unsecured loan market has embraced advanced technologies, enhancing the borrower experience:

  • Digitalization: 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.
  • Chatbots: Chatbot software programs are increasingly used by businesses offering unsecured loans to deliver personalized and user-friendly experiences for clients.
  • Innovation: Technological advancements have spurred the development of innovative unsecured loan schemes, providing profitable opportunities for market expansion.

Market Segmentation:

The unsecured loan market is segmented based on various criteria:

  • Loan Types: Personal loans, education loans, credit card loans, agricultural loans, home improvement loans, and others (short-term business loans, consumer durable loans, etc.).
  • Provider Types: Banks, non-banking financial companies, and others (fintech companies).
  • Interest Rates: Loans can have fixed or floating interest rates.
  • Loan Tenure: Loans can have tenures of less than 3 years, 3-5 years, or more than 5 years.
  • Geographic Regions: The market is segmented into North America, Europe, Asia-Pacific, Middle East & Africa, and South America.

Major Market Players:

Key players in the global unsecured loan market include:

  • 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
  • HDFC Bank Ltd.

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