Bruce Gehrke of JD Power talks about borrowers’ health

According to JD Power, what if one in four individual loan borrowers say they identify themselves as “financially healthy.”

Consumer insight data companies also rate personal loan lenders — we reach their rankings — but the latest survey of nearly 6,000 borrowers may fill that surprising lead.

“We can trend the last three years. We’ve seen a significant decline in the overall financial health of our respondent pool,” says Bruce Geke, lending intelligence at JD Powerhead.

Gehrke added: “So, when we see satisfaction as flat compared to other lending satisfaction, which has risen significantly over the past few years, we feel that this isn’t just a mark like in the past.”

Why personal loan borrowers feel bad

Maybe it’s all so easy. TA-DA can be combined with record levels of consumer debt in America with economic uncertainty such as inflation, trade wars, sensitive stock markets and fear of recession.

But there is one obstacle to that story. As Gehrke hinted, over 25% of borrowers taking other products say their finances are fine.

Gehrke says that other JD Power studies have shown that three in four borrowers tend to be financially healthy. “So when you don’t see that big increase like you see with other lending products, I think you’re missing out a bit on that when it comes to the emotional aspects of connections,” says Geke.

So what gives?

Personal loan ”Set it and forget it

Yes, taking out a personal loan is less emotional than a college student loan or a home mortgage for example. The latter product can be considered an investment in your future. Personal loans can be withdrawn for almost any purpose, but are usually a way of dealing with debts that already exist in different ways through integration.

However, the lack of borrower lender connections in personal loans may be more than inherent. This is a side effect of how easy it has become in recent years to apply, get approval and receive personal loans. FinTech promotes brick and retail banks and credit unions, offering streamlined applications, online prequalifications and direct deposits within hours.

And once the loan begins, many people’s relationships are kind of an end. Borrowers (ideally) sign up for Autopay, and lenders collect payments. Why reach out to us when everything is going according to the plan?

“Now I know that I have a specific lender that is very unique with my target clients. They are either playing an active financial health role or trying to do that,” says Geke. “So it doesn’t always seem wider. But in many of these (cases), we set it up and forget it.”

Stubbornly high interest rates, strict qualification standards

The more you pay something, the more likely you will feel squeezed, especially if the value of something like a personal loan hasn’t changed. And personal loan borrowers who have borrowed over the past 12-24 months (respondent pools from JD Power’s analysis) have paid much more in the form of higher interest rates.

It’s no wonder JD Power’s top-rated lenders tend to lower average personal loan interest rates. These lenders also typically lend to borrowers with strong credit and income. A borrower who is unlikely to struggle to repay, considers himself “financially unhealthy” and is dissatisfied with the lender.

As Gehrke says, “You can see that by looking at the rank chart.”

So, which is the best personal loan lender?

Gehrke says it’s clear that the majority of consumers will borrow one of two purposes as JD Power is conducting a personal loan investigation for six years. It involves consolidating high-end debt or dealing with unexpected costs for those without substantial emergency savings.

Some lenders, such as the highest-ranked American Express and Citibank, specialize in helping clients settle their debts. They offered credit cards and they began offering personal loans to avoid losing those clients to other lenders who offer low interest rate debt consolidated loans.

Another group of lenders – the lowest ranks of Onemain Financial, Opploans and Oportun are also operating in the debt settlement space, with a few names. But they are more likely to support consumers at their unexpected costs, like the surprising medical bill, even if they don’t have great credibility.

These lenders’ clients are likely to be dissatisfied and likely to be financially unhealthy, which is considered to be a low ranking.

Which personal loan lender is best for your situation?

Gehrke says top-performing lenders will do well because of service in three areas.

Of course, JD power is not the source of truth. Hey, Bankrate also awards top personal loans.

But the bottom line is that the best personal loan lender for you may not be the best option for your neighbor. And it’s not necessarily the easiest loan.

So how do you know which lender is the right lender for you? Well, that requires consideration and research. This is the best place to start: