Whether we’re aiming to live our best lives, settle old debts, or handle unexpected expenses, we frequently find ourselves borrowing money now to pay it back later. But this is tricky terrain and many find themselves in an endless loan loop.
Still, how can you say no to a dream honeymoon, a newly furnished kitchen, or a swanky new ride? Personal loans are a fact of modern life and it’s better to be savvy than sorry!
To learn more about how personal loans work, check out these personal loans statistics.
Facts of Interest on Personal Loans in Australia
- The value of the personal loans market in Australia was $173 billion in 2019
- Some 40% of Gen X Australians use personal loans to consolidate debts
- As of 2020, the average interest rate for a personal loan is 14.41%
- The average personal loan amount in Australia is $15,000-$16,000
- The debt-to-income ratio in Australia was 185% in 2020
- The average home loan debt is $456,000
- Over a third of Australians struggle with repaying their debts
- 10% of Australians put credit card or loan payments on hold due to COVID
Personal Loans Statistics
1. The value of the personal loans market in Australia is over $170 billion.
(Wonder)
As of 2019, the total outstanding loans of Australians amounted to $173 billion. In only 3 months (June-August 2019), the personal loans amount increased by $30 billion.
2. Around 8 million Australians took out loans during 2019.
(Wonder) (Fool)
Close to 40% of the adult Australian population took out personal loans in 2019. For comparison, only 6% of Americans took out a personal loan in the same year.
3. The average personal loan amount in Australia is $15,000-$16,000.
On average, Aussies take out personal loans worth something between $15,000 and $16,000. Those with families take out loans to the tune of $17,289 on average, while couples are slightly “more modest”, loaning an average of $14,946. The average for singles is $13,966.
4. As of 2020, the average interest rate for personal loans is 14.41%.
(Reserve Bank of Australia)
According to RBA statistics, since January 2019 the average variable interest rates for a personal loan have been a steady 14.41%. The average fixed personal loan rates were 12.46% in Q1 of 2020.
5. In April 2021, new loan commitments for fixed-term personal loans rose by 4.8%.
(Australian Bureau of Statistics)
Read more: How Does the Cash Rate Affect Interest Rates
The value of new loan commitments for fixed-term personal loans increased by 4.8% during the month of April 2021. In comparison, housing loans rose by 3.7% in the same month and 68.2% throughout the year, while the value of new loan commitments for business construction decreased by 10.5%.
6. Banks have been losing ground to non-bank and online lenders for a decade.
The structure of the personal loans market is gradually changing. Back in 2010, bank loans comprised 86% of the market, whereas other lenders were limited to 14%. With time, non-bank lenders, such as credit unions and online lenders, took up a bigger chunk of the lending market and have now doubled their share to 28%.
Personal Loans Borrower Profile
7. Almost 40% of Gen X Australians take out loans to consolidate debt.
One of the primary reasons for a personal loan in Australia is debt consolidation. This holds for close to a third of all borrowers: 37.1% of Millenials, 37.4% of baby boomers, and as much as 39.6% of those aged 41-56 (the so-called Generation X) apply for personal loans to consolidate their debts.
8. One in five baby boomers renovate their home with a personal loan.
Renovating usually means a sizable investment of time and money. Home improvements are the second most popular reason for taking out a personal loan in Australia. 20% of those currently aged 57-75 (the so-called baby boom generation) take out a personal loan to make this move. The same is true for 17.2% of Generation X Australians.
9. One in seven millennials use personal loans to buy a car.
(Wonder) (Australian Bureau of Statistics)
Another common reason why Aussies borrow funds is financing the purchase of a new car. Somewhat understandably, the age group most keen on getting a new ride are millennials, with 14.1% taking out a personal loan for this reason. In general, the new loan commitments for road vehicles increased by 3.6% in April 2021.
10. All age groups are alike when it comes to holiday and travel loans.
Both younger and older generations love travelling and use loans to achieve their dreams in equal numbers: 8.7% of Millenials, 7.8% of Gen X-ers, and 8.7% of baby boomers in Australia take out personal loans in order to travel, according to 2021 data.
11. Australians rarely use personal loans for investing.
Investing is probably the last thing someone thinks of when getting a personal loan. Weddings – yes, emergencies – of course, renovations and moving costs – sure, but investing? Not so much. Only 1.8% of millennials, 1.4% of Gen X, and 1.1% of baby boomers use their loans to secure a better cash flow in the future.
12. The average amount Gen X borrows is over $16,000.
The highest average amount borrowed among all age groups is that of 41-56 year-olds at $16,793. The average amount of money borrowed for baby boomers is $15,676, and $14,832 for Millenials (25-40 year-olds).
13. The average credit score for Australians aged 55+ is 735.
(Credit Savvy)
Worryingly, younger generations in Australia are way below the national average credit score. Millennials in particular have the lowest average credit scores among all age groups – 564, while 25-34 year-olds are rated at 610 on average. The ratings improve as we go up the age brackets, so for 45-54 year-olds, the average credit score is 682, whereas those 55 and over boast the highest credit score of all at 735, much higher than what is considered a good credit rating of 700.
Personal Loans Debt Statistics
14. Over a third of Australians struggle with repaying their debt.
(ABC News)
In terms of the various types of consumer debts, Australians hold one of the world’s highest household debts—Australia’s combined personal debt is somewhere around $2 trillion. Unsurprisingly, 55,000 respondents of the Australia Talks National Survey, see debt as a nationwide problem. In addition, 37% of Australians have a hard time paying off their debts, and as much as half of the millennials report they struggle with debt.
15. The average small business in Australia owes $18,624.
(Mozo)
Debt is overdue for 62% of Australian small businesses and, on average, each owes about $18,624. Interestingly, this varies widely across states. For example, New South Wales business debt is $4.4 billion, of which 78% is overdue. In West Australia, on the other hand, the debt amount is $236 million, with only 22% being overdue.
16. One in ten Australians put credit or loan payments on hold due to COVID.
(RoyMorgan)
With almost a million losing their jobs during the pandemic, the personal loans market and the general finances of Australians changed dramatically. 27.3% of the population made changes to their finances due to the impact of COVID-19, 10.3% put their credit card or personal loan payments on hold or reduced repayment plans, while 10% put their mortgage on hold for a period.
Bottom Line
Aussies seem to need an extra “lending hand” at the moment, which explains the many loan providers all over the country. New loan commitments have risen in recent years and so have loan balances. To keep track of the situation, remember to always read the small print and our detailed personal loans statistics.
- ABC News
- ANZ
- Ascent
- Australian Bureau of Statistics
- Canstar
- Commonwealth Bank
- CoreLogic
- Credit Savvy
- Equifax
- Illion
- MoneyExpert
- MoneyPlace
- Mozo
- Mozo
- Mozo
- NAB
- Plenti
- RateCity
- Reserve Bank of Australia
- RoyMorgan
- Westpac
- Wonder
