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Top 10 Uses of Friends & Family Personal Loans

Friends & Family Loans Remain Popular

 

$Billions in loans are transacted every year in the U.S. between friends & family.  There are several reasons why turning to family or friends for a loan is preferred by borrowers. The borrower may have a poor credit score and not qualify for a bank loan.  The borrower may be shopping around and find that borrowing from family provides a much more attractive interest rate and payment terms.  In some cases, the money is needed for very basic necessities which our top 10 reasons below will show.

Most Common Personal Loan Type is Paying Bills

According to a survey by Finder, the top three reasons for obtaining a personal loan from friends or family are to pay utilities and other bills (46%), pay rent (23%) and medical emergencies (17%.)   

 

In general, older borrowers were more likely than those younger to use their loan for medical emergencies or to start a business. Those with higher incomes were three times as likely to request a loan from friends and family in order to start a business.

The average amount borrowed to start a business was $7,500 compared to an average of $3,200 for all loan types.

It is clear that the majority of loans are needed to pay for already existing debts including general bills, housing and other loan repayments.  A smaller percentage are for new purchases such as cars, new homes or starting a business.  In any case, turning to family and friends is a popular way to obtain funds when needed.

Top 10 Reasons to Get a Personal Loan from Friends & Family*:

Utilities & Bills
46%
Rent
23%
Medical Payments
17%
Loan Repayment - Car, Student, Credit Card Loan
17%
Large Purchase
16%
Buy a Car
8%
Buy Furniture
7%
Pay Mortgage
6%
Buy a Home
5%
Start a Business
4%

*From Finder study on loan transactions between friends and family.

LendAmi Resources for Transacting a Successful Friends & Family Loan