Americans are increasingly turning to personal loans as a means to manage their finances, a recent report from credit bureau Experian reveals. According to the report, as of 2025, a record 38% of consumers have at least one personal loan, a significant increase from 30.9% in 2017. Over the past eight years, the use of personal loans has steadily risen, with average balances reaching $19,333 in 2025.
The report attributes this surge in personal loan usage to various factors, including consumers’ desire to find lower-cost alternatives to managing their debt. With credit card balances continuing to climb and interest rates at record highs, more individuals are seeking out personal loans as a mainstream household finance tool.
Rakesh Patel, Executive Vice President for Experian Consumer Services Marketplace, notes that both the number of loans and the total balances have increased across different borrower segments, indicating a widespread adoption of personal loans as a financial management strategy.
The report also highlights that approximately half of Americans plan to take out a personal loan in 2026, citing rising inflation and tariffs as driving factors. While debt consolidation remains a common reason for taking out a personal loan, consumers are increasingly citing major purchases, emergency expenses, home improvements, vacations, medical expenses, and education as reasons for seeking out personal loans.
The changing economic landscape, marked by rising costs and low interest rates, has made personal loans an attractive option for many individuals looking to achieve their financial goals. The report from Experian suggests that personal loans are gaining popularity as a lower-rate alternative for managing debt balances and addressing the impact of inflation.
Another report from TransUnion echoes this trend, showing a record number of quarterly unsecured personal loan originations in the last quarter of 2025. The report highlights how personal loans have served as a financial release valve for many households, offering a way to consolidate debt, cover gaps, and manage inflationary costs.
The Federal Reserve’s interest rate cuts over the past couple of years have also contributed to the growing interest in personal loans, as rates tend to follow federal rate changes. Compared to average credit card rates that hover above 20%, personal loans offer more favorable rates, averaging around 11%.
While the Fed has opted to hold its benchmark rate steady in recent meetings, even small rate movements can significantly impact borrowers in the long run. Patel emphasizes that lower rates can translate into lower monthly payments and make refinancing higher-cost debt more attractive.
If you’re considering applying for a personal loan this year, it’s essential to understand the different features of the loan to ensure it aligns with your financial goals. Factors to consider include whether the loan is secured or unsecured, the APR, origination fees, loan term, loan amount, and the presence of a prepayment penalty.
By carefully evaluating these factors and understanding the current financial landscape, consumers can make informed decisions when it comes to leveraging personal loans as a financial management tool. As personal loan usage continues to rise, staying informed and proactive in managing debt can help individuals navigate the evolving economic environment effectively.
