Personal Loan Interest Rate Forecasts for 2020

13 Jul 2020

Personal loans are a popular option among people to meet financial emergencies. Trends show that the top reason why people in the US are resorting to personal loans is debt consolidation followed by unforeseen life events or medical needs. Personal loans are quite an attractive option when the economy is strong, and the people do not fear the loss of their jobs or a fall in their income. They take such loans only when they are confident that they would be able to repay the personal loan along with the interest component on time.

Banks are also playing their part by offering low-interest personal loans to people. So, is the rate hike going to be a problem in 2020? Or, is easy availability of personal loans at competitive rates of interest going to allow more people to get credit? Let’s find out.

In late December, the Federal Reserve increased the central bank’s benchmark interest rate which happened to be the fourth rate hike last year. It is natural for the borrowers to get worried about such frequent increase in the federal funds rate. However, the central bank is of a different opinion. Insights suggest that during 2020 there will be fewer rate hikes than expected.

Credit availability could shrink with a shaky global situation

Considering the expected labor shortages and an economic downturn in 2020, credit availability could be a problem. If this happens, people would not need to worry about interest rates; it would not shoot up. However, availability will continue to be a problem. Those with good credit scores will find it easier to get personal loans while people having lower scores will struggle. So, if you are looking forward to taking a personal loan in the future, you should maintain a good to excellent credit score to improve your chances of approval.

2020 calls for a healthy credit market

As mentioned before, people are more confident to take personal loans if the economic condition is stable in the country. People belonging to the age group 30 to 40 are the most interested in taking a personal loan. They are middle-aged and are tied with up many responsibilities, but at the same time, they have income that is sufficient to meet regular EMI payments over the next few years. And with a strong economy, they can be more certain about their future income and whether they would be able to meet future obligations. As observed mostly among the U.S. citizens, personal loans are extremely popular among consumers aged in the range of 40 to 49 years. This is the time where they are midway through their career and lives.

Should you take a personal loan in 2020?

As per a TransUnion forecast, personal loan balances are estimated to rise by 20% to reach an all-time height of $156.3 billion at the end of this year. The actual figure of new loan originations so far this year also suggests growth of about 9.5%. The safe forecast has also predicted that about 20 million fresh personal loans are due to be issued in the year 2020.

There is no reason not to consider personal loans for meeting a cash crunch. Banks are increasingly offering attractive rates of interest on these loans - some as low as 6 percent. A lower rate is better, once you find that, the next step is to look for better terms and conditions that suit your requirements.

Where to get a personal loan is the second question that comes to people’s minds after they find out that personal loan is the solution to their financial woes. Listed below are a few good personal loan companies to resort to in 2020.

  • SoFi- Benefit of no fees on personal loans; you have to pay the interests.
  • Best Egg- Online personal loan lender best for debt consolidation loans.
  • Payoff- Best to take personal loans for credit card debt consolidation.
  • Marcus by Goldman Sachs- Known for competitive rates of interest.
  • Earnin- Small personal loans with low interest and low fees.
  • Prosper- Best for Marketplace loans.

So, the above are some good personal loan companies to choose in 2020. You can directly go to your bank or approach them via an aggregator. If you face a financial emergency in 2020, personal loans will continue to come as good help. All you have to do is understand your requirement, compare the best offers and look for a loan that is the perfect fit for your needs.