Data Lab: How borrowers use loans differently in each month of the year
In our last Data Lab report, we took a deep dive into the generational variations of how people use their personal loans. We found, for example, that younger people seek out more loans to pay for weddings and moving. Older borrowers use loan funds more frequently for medical expenses and home improvement.
It turns out that the age of borrowers isn’t the only criteria playing a role in why people turn to loans. Americans borrow for different reasons depending on the months in which they request their loans, providing a glimpse into how people’s financial priorities ebb and flow throughout the year.
In this study, the Data Lab team took a close look at monthly variations in loan usage. The team analyzed three years worth of loan data, month by month.
Here are some key findings:
- Loan requests in December are more than twice as likely to be earmarked for elective medical procedures than what is typical throughout the year.
- Loan requests in August are 24% more likely to go towards moving or relocation costs. That month also sees 22% more requests for wedding loans.
- Loan requests in February are nearly three times as likely to go towards taxes. Loans in April are nearly one and a half times as likely to pay tax bills.
“We know that demand for personal loans is surging, and what we see with this new data tells us one reason why,” said Mark Lorimer, LendingPoint chief marketing officer. “Many people are relying on loans to pay for the typical, cyclical annual expenses, in many cases forgoing credit cards to cover those costs.”
“December loans are more likely to go towards elective medical procedures, for instance, because people may be using up their medical savings accounts before the year’s end, and need a little extra to cover procedures that exceed their savings. Summer is the most common time to move, so it makes sense we see disproportionate loan requests for relocation in August. And Uncle Sam comes calling in April, so we expect those loan requests for taxes to show up disproportionately in the early part of the year.”
Below is each of the eleven loan uses included in this study, and the month in which requests for each is the most disproportionately high:
|Use||Month||Percent over annual average|
This is the full table of how loan requests are distributed among the eleven use cases studied, in each month, it shows the percent of each month’s loans that borrowers say they’ll use for each of the eleven options we studied, and it also includes the overall percent of loan requests in each of those usage categories, so you can see how each month varies from what is “standard.””
|Use of Funds||Jan||Feb||Mar||Apr||May||Jun||Jul||Aug||Sep||Oct||Nov||Dec||Total|
*The use cases in this study do not include all possible use cases. In addition to the eleven in this study, borrowers also can choose credit card refinancing, debt consolidation, “personal loans” and “other.” Credit card refinancing and debt consolidation are the most common reasons people cite for requesting loans, in all months.
About LendingPoint Data Lab:
The LendingPoint Data Lab analyzes data, from both LendingPoint’s own business and from third party sources, to unearth trends and insights into Americans’ borrowing behavior.
For this study, the LendingPoint Data Lab calculated the total number of loans LendingPoint originated in 2015, 2016 and 2017 by the month in which borrowers submitted loan applications. It then calculated the percent of loans originated by each of the fifteen use cases LendingPoint allows applicants to select on its online application.
The Data Lab excluded all loans for which the borrower indicated using the loan for credit card refinancing, debt consolidation, “personal loan,” or “other,” and calculated percents for each month, and overall, based on the total remaining loans. Those loans are: auto, business, elective medical, emergency, home improvement, major expense/purchase, medical, moving/relocation, taxes, vacation/travel and wedding
LendingPoint is a personal loan provider specializing in NearPrime consumers. Typically, NearPrime consumers are people with credit scores in the 600s. If this is you, we’d love to talk to you about how we might be able to help you meet your financial goals. We offer loans from $2,000 to $25,000 with terms from 24 to 48 months, all with fixed payments and simple interest.