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Data for today’s episode is provided by Mercator Advisory Group’s Report: Installment Lending: Fintechs Gaining Ground on Loans Forecast at $212 Billion
U.S. Household Debt by Type:
- Collateralized debt from mortgages and home equity lines of credit accounts for 73% of U.S. consumer debt.
- Collateralized debt from auto loans accounts for 9% of U.S. consumer debt.
- Unsecured credit card debt accounts for 5% of U.S. consumer debt.
- Unsecured student loan debt accounts for 10% of all U.S. consumer debt.
- 3% of U.S. consumer debt is classified as “other,” which includes short-term loans, checking account credit lines, and ancillary lending.
Mercator Advisory Group released a report on trends in installment lending titled Installment Lending: Fintechs Gaining Ground on Loans Forecast at $212 Billion. The research explains the state of consumer installment lending in the United States and how fintechs and finance companies now outpace banks and credit unions in installment loans. Furthermore, this research examines how companies are offering embedded finance products such as CCaaS to allow customers the ability to offer their own credit card product. By way of four evaluative criteria, general advice is provided for those seeking a relationship with a fintech provider.
“Banks used to dominate consumer lending, with installment lending products priced far lower than credit cards, but that is no longer the case,” comments Brian Riley, Director of the Credit practice at Mercator Advisory Group, and the author of the research report. “Buy Now, Pay Later (BNPL) was a wake-up call to credit card issuers. BNPL was a recast of a merchant finance model used long ago by companies like GECC (now Synchrony) and Household Finance Corporation (acquired by Capital One). Now, fintechs are moving in the same direction with installment loans,” Riley says.