Finance

Many personal loan borrowers rely on loans for everyday expenses as cost of living grows

Published

1 year ago

April 18, 2024

Business Finance News

The third most common use of personal loans is for everyday expenses. (iStock)

The personal loan market is growing, in part due to the high cost of living. About 14.5% of borrowers use personal loans for everyday expenses, a MarketWatch Guides survey found.

The two more common reasons consumers use personal loans are debt consolidation and home improvements. Nearly 21.2% of personal loans are used to consolidate debt and 20.1% are used to make home improvements. Borrowers are dealing with increasing prices in every industry, from food to building materials to housing costs. To deal with the rising costs, these borrowers turn to personal loans.

“Families have already cut back on nonessentials, and there isn’t much left to take out of their budgets,” EJ Antoni, an economist with the public policy nonprofit Heritage Foundation said. “What little growth there is in consumer spending is being fueled by debt – and that’s unsustainable.”

The loans being taken out aren’t small — 35% of borrowers surveyed reported that their loans were between $10,000 and $50,000. Just 29% of borrowers have loans that are less than $2,499.

When it comes to personal loan shopping, Credible can do the heavy lifting for you. With the click of a button, you can view multiple lenders, rates, and terms in one spot.

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Household debt is up in all categories

At the end of last year, most consumer debts rose substantially. The Q4 household debt report released by the Federal Reserve Bank of New York found that mortgage debt rose by $112 billion while home equity lines of credit increased by $11 billion.

Credit card balances now stand at $1.13 trillion after increasing by $50 billion in Q4. Auto loan balances also increased into the trillions to $1.61 trillion.

“There are some consumers in the less-than-prime segments that have been accumulating debt at an accelerated pace, likely due to the rise in the cost of everyday items,” Experian’s Director of U.S. Economics Joseph Mayans said. “That may continue to cause strain in 2024, especially as the post-pandemic jobs boom that drove red-hot wage gains and easy job hopping for many lower-income workers comes to an end.”

The only debt measured in the survey that didn’t increase all that much was student loan debt. They increased by $2 billion and now stand at $1.6 trillion.

If you need help paying down your debt, a personal loan can consolidate your debts into one payment with lower interest. If you want to get a sense of what debt consolidation loan options are available to you, visit Credible to compare rates and lenders.

HIGH DEBT IS CAUSING MORE CONSUMERS TO LIVE PAYCHECK-TO-PAYCHECK

The cost of living is growing more challenging for many families

Certain states are facing a cost of living crisis, with many residents spending most of their income just on housing and utilities.

Half the residents of New York City lack the income to meet the basic cost of living, according to a United Way of New York report. In 2021, just 36% of households struggled to deal with the cost of living. Of those struggling, 79% of families spent more than 30% of their income on housing alone. The report also found that 30% of households in NYC received food assistance.

Californians also deal with high living costs compared to low incomes. A report from California’s Legislative Analyst’s Office (LAO) researched the effects of minimum wage on different sized households. A single parent with three kids will live right around the poverty level with a full-time job, but for a single parent with four kids, the minimum wage is below the poverty level.

Housing in California is particularly difficult to afford. Minimum-wage earning single parents with one child often can’t afford housing in all but three counties in California, the LAO report found. Even families with two minimum-wage workers pay more than half of their income in eight of California’s most popular coastal counties.

If you need a loan, personal loans with low interest rates are strong options. Use an online marketplace like Credible to make sure you’re getting the best personal loan rate and lender for your needs.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Finance

U.S.-China agree on framework to implement Geneva trade consensus

Published

1 hour ago

June 10, 2025

Business Finance News

U.S. Treasury Secretary Scott Bessent speaks with the media as he departs to return to the U.S., while trade talks between the U.S. and China continue, in London, Britain, June 10, 2025.

Toby Melville | Reuters

The U.S. and China have reached consensus on trade, representatives from both sides said following a second day of high-level talks in London, according to an NBC transcript.

“We have reached a framework to implement the Geneva consensus and the call between the two presidents,” U.S. Commerce Secretary Howard Lutnick said.

That echoed comments from the Chinese side, shared via a translator.

Lutnick said he and U.S. Trade Representative Jamieson Greer will head back to Washington, D.C., to “make sure President Trump approves” the framework. If Xi also approves it, then “we will implement the framework,” Lutnick said.

Earlier, U.S. Treasury Secretary Scott Bessent told reporters he was headed back to the U.S. in order to testify before Congress on Wednesday.

This is breaking news. Please check back for updates.

Finance

Gundlach says to buy international stocks on dollar’s ‘secular decline’

Published

3 hours ago

June 10, 2025

Business Finance News

Jeffrey Gundlach speaking at the 2019 Sohn Conference in New York on May 6, 2019.

Adam Jeffery | CNBC

DoubleLine Capital CEO Jeffrey Gundlach said Tuesday that international stocks will continue to outshine U.S. equities on the back of what he believes to be the dollar’s secular downtrend.

“I think the trade is to not own U.S. stocks, but to own stocks in the rest of the world. It’s certainly working,” Gundlach said in an investor webcast. “The dollar is now in what I think is the beginning of [a] secular decline.”

Gundlach, whose firm managed about $95 billion at the end of 2024, said dollar-based investors who buy foreign stocks could enjoy “a double barreled wind” if the greenback declines against foreign currencies and international equities outperform.

The dollar has weakened in 2025 as Trump’s aggressive trade policies dented sentiment toward U.S. assets and triggered a reevaluation of the greenback’s dominant role in global commerce. The ICE U.S. Dollar Index is down about 8% this year.

“I think it’s perfectly sensible to invest in a few emerging market countries, and I would still rather choose India as the long term hold there,” Gundlach said. “But there’s nothing wrong with certain Southeast Asian countries, or perhaps even Mexico and Latin America.”

The widely-followed investor noted that foreigners invested in the United States could also be holding back committing additional capital due to heightened geopolitical tensions, and that could create another tailwind for international markets.

“If that’s reversing, then there’s a lot of selling that can happen. And this is one of the reasons that I advocate ex U.S. stocks versus U.S. stocks,” he said.

The investor has been negative on the U.S. markets and economy for some time, saying a number of recession indicators are starting to “blink red.”

Gundlach predicted that the Federal Reserve will stay put on interest rates at its policy meeting next week even as current inflation is “quite low.”

He estimated that inflation is likely to end 2025 at roughly 3%, although he acknowledged the difficulty in predicting future price pressures due to the lack of clarity in President Donald Trump’s tariff policy.