14 New Statistics Highlight Changing Borrower Behavior


 ·  By Elise Cox
The popularity of Klarna's pay in four interest-free loans was evident in an annual report by the California Department of Financial Protection and Innovation.

An annual report by the California Department of Financial Protection and Innovation released earlier this month revealed a remarkable shift in the behavior of California borrowers between 2019 and 2020.

The “Annual Report of Finance Lenders, Brokers, and PACE Administrators Licensed Under the California Financial Law” captured some eye-popping percentage changes: The number of consumer loans more than sextupled while the principal amount roughly doubled. Most interesting to the Canopy editorial team was the sweeping degree that consumers avoided familiar lending constructs. They flocked instead to Buy Now Pay Later, borrowing an average loan amount of $109.84.

Real estate lending was strong, driven by record-low mortgage rates. At the same time, unsecured, high-interest loans for amounts ranging between $2,500 and $10,000 virtually disappeared.

Consumer behavior can be partly explained as a response to the economic disruption caused by the pandemic and the government’s unprecedented response last year. But it’s also possible that we could be witnessing more fundamental changes as new lending constructs become increasingly more common.

Some highlights from the report:

  • Lenders originated almost 12 million consumer loans in California in 2020, a 530% increase.

  • The top six BNPL lenders accounted for 10,924,547 loans or 91%.

  • The number of consumer loans secured by real estate in 2020 was 261,777, an increase of 117%.

  • Excluding BNPL, the number of consumer loans was 1,005,094, a decrease of 41% from 2019.

  • Excluding BNPL, consumer loans secured by real estate numbered 261,777, or 26% of all loans, roughly one in four.

  • The total principal amount of consumer loans made in 2020 increased to $112.2 billion, or 96.8%

  • The total principal amount of consumer loans made in 2020 excluding BNPL increased to $111 billion, or 94.8%

  • The total principal amount of consumer BNPL loans made in 2020 was $1.2 billion.

  • The total principal amount of consumer loans secured by real estate was $101 billion, an increase of 114%.

  • The average amount of a BNPL consumer loan in 2020 was $109.84.

  • The average amount of a consumer loan secured by real estate in 2020 was $385,824.58.

  • The average loan amount greater than $10,000 that was not secured by real estate was $67,969.

  • Excluding BNPL, the number of unsecured loans fell approximately 16%, from 77% in 2019 to almost 61% in 2020.

  • The number of high-interest loans for amounts between $2,500 and $10,000 fell by 99.9% from 376,645 in 2019 to just 36 in 2020.


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