New data and insights about personal lending from J.D. Power will hit the headlines in May of 2021 when we publish the J.D. Power U.S. Lending Study. Given that half of all personal loans are used for debt consolidation or to pay off a credit card, it’s crucial that lenders get the customer interaction formula right. This research evaluates customer satisfaction with personal loan providers and explores the key variables that influence customer choice, satisfaction, and loyalty.
Following are key findings of the 2020 study:
Repayment terms and reputation are key drivers in lender selection: The two most important variables driving the selection of a consumer lender are repayment terms and the reputation of the lender. Additional factors weighing heavily on the decision process are quick application and approval processes; the ability to speak with a live person via phone; and the quality of mobile and digital capabilities.
Most customers plan to keep making payments on personal loans and HELOCs: Based on additional J.D. Power research conducted May 8-10 of this year, fewer than 15% of personal loan and HELOC (home equity line of credit) customers feel they will be unable to make their minimum monthly payments as a result of the COVID-19 pandemic. However, 42% say they feel the worst is yet to come in terms of the effect of the pandemic on their personal finances.
Documents are the enemy of customer satisfaction: The ideal number of documents required to apply for and receive approval for a consumer loan is zero. Overall satisfaction with lenders is 893 (on a 1,000-point scale) when no documents are required. That score falls to 865 when one or two documents are required.
Customers will consider alternative products:As the market for personal loans continues to gain new entrants from traditional retail, e-commerce, and technology sectors, 58% of consumers say they did consider using alternative products for lending.