How are education and income related to the ways Americans apply for their loans online and offline?

Many Americans apply for loans each year; in the Center’s forthcoming study on the future of money and banking, we found that 21% of respondents applied for a loan in the last twelve months.

How do Americans apply for those loans?  Does education or income play a role in decisions to apply for  a loan?

Loan provider — Thirty-five percent of respondents said they applied in person at a bank or credit union, 41% online at a bank or credit union, and 29% using some other source online such as a peer-to-peer service or a lending club.

Education, income, and loans — level of education and level of income are related to the likelihood of applying for loans.

Nineteen percent of those with some college education or less, and 22% of those with a college education or more applied for a loan in the last twelve months.

Nineteen percent of those with less than $75,000 yearly household income, and 26% of those with a yearly household income of $75,000 or more applied in the last twelve months.

Loan methods — How do education and income relate to the method used to apply for a loan? First, regarding education: of those with some college education or less, 33% applied in person at a bank or credit union, 38% applied online at a bank or credit union, and 32% applied using some other source online such as a peer-to-peer service or a lending club.

Of those with a college education or more, 37% applied in person at a bank or credit union, 45% applied online at a bank or credit union, and 25% applied using some other source online such as a peer-to-peer service or a lending club.

Next, let’s look at income. Of those with less than $75,000 yearly household income, 36% applied in person at a bank or credit union, 34% applied online at a bank or credit union, and 34% applied using some other source online such as a peer-to-peer service or a lending club.
Of those with a yearly household income of $75,000 or more, 33% applied in person at a bank or credit union, 53% applied online at a bank or credit union, and 21% applied using some other online source such as a peer-to-peer site or a lending club.

In sum:

  • Of Americans who borrow, many are using the internet to apply for their loans.
  • Those with less education, and especially those with less household income, are more likely to use peer-to-peer services and lending clubs online.
  • Those with more education, and especially those who have more household income, are more likely to get their loans online through banks and credit unions.

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August 8, 2017