3 Reasons You Might Need To Take Out a Personal Loan
America's personal loan debt plummeted in 2020 due to the COVID-19 pandemic, after nearly a decade of steady growth. However, since 2021, our personal loan debt has consistently increased by about $100 billion.
Personal loan debt totals in the U.S. jumped to $167 billion in 2021, $220 billion in 2022, $245 billion in 2023, $249 billion in 2024, and was around $269 billion in Q3 2025, showing significant growth from previous periods. In fact, it's over $200 billion more debt than in 2011, when numbers were at their lowest in 15 years at $46.4 billion.
So why the exponential increase? Why are millions of Americans taking out such enormous amounts in personal loans? Let's take a closer look.
The Debt Breakdown
First, some context. While these numbers are dizzying, it should be noted that personal loans are only 1.4% of all consumer debt in the country -- quite literally the smallest portion of all American debt. Mortgage loans make up the most amount of debt at around 70%, with auto loans (9.1%) and student loans (8.9%) being in second and third place.
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As for the reasons behind the spike in personal loans, here are the top three:
Paying down other debts
Paying bills
Home improvement
Lending Tree previously noted that over 50% of all such debt is actually used to pay down other debts. Specifically, 39.9% of personal loans are used for debt consolidation with an additional 11.4% for credit card refinancing.
Elsewhere, 8.1% of personal loan debt is used to pay everyday bills, and another 7.2% is used for home improvement. Given that over 70% of all consumer loan debt is tied to mortgage loans, it makes sense that folks would want to keep up with home improvements.
While personal loan debt is indeed a sliver of the overall consumer debt in America, its numbers are expected to continue to rise in order to match growing credit card and mortgage loan debts. If you'd like more info on paying off your personal loans, check out these strategies anyone can use to pay off debt.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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