As per Q1 2025 TransUnion data, the total unsecured personal loan debt was $253 billion spread across 29.8 million loans. The average unsecured loan amount per borrower was $11,631.
Nearly anyone can apply for a personal loan, assuming they meet the credit and income requirements. This includes baby boomers — those born between 1946 and 1964.
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But why do boomers take out personal loans? And what should they be on the lookout for when doing so? Here’s what the experts say.
Key Reasons Boomers Use Personal Loans
Boomers can apply for a personal loan for nearly any reason. According to Chris Motola, special projects editor and financial analyst at National Business Capital, the biggest reasons include:
- Purchasing a big-ticket item like a vehicle (auto loan) or home (mortgage loan).
- Time-sensitive or expensive purchases related to medical conditions (e.g. mobility-related home improvements).
- Elective medical procedures.
“In many of these cases, a personal loan is seen as an alternative to selling off income-generating assets,” Motola said.
But these aren’t the only reasons for taking out a personal loan. And for some boomers, buying a new car or house isn’t top of their list.
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However, paying off high-interest debt — like credit cards — often is. According to the Federal Reserve Bank of St. Louis, the average U.S. household owes approximately $6,065 in credit card debt. With typical APRs of 22.8% and retirement income often limited or fixed, per the Consumer Finance Protection Bureau, it’s prudent to get rid of said debt with something a little less expensive.
“Most of the time, people can qualify for a personal loan rate much lower than credit card rates,” said Kyle Enright, president of lending at Achieve. “So they can use the personal loan proceeds to pay off the higher-rate credit card debt, then be left with just the personal loan payment at the lower rate. This makes it faster and less expensive to pay off the debt.”
Other common reasons boomers take out personal loans include:
- Home maintenance or repairs
- Remodeling
- Medical bills
- A relative’s educational expenses
Considerations When Taking Out a Personal Loan
Ultimately, it’s up to the individual’s financial situation, credit score and needs as to whether or not they use a personal loan — and for what purpose. Whether you’re a boomer or have an older relative who’s considering a loan, knowing the options is important.
But what’s equally crucial is understanding the consequences of taking on that debt.
“If you’re living on a fixed income, pay very close attention to the interest rates you’re offered,” said Motola. “You don’t want to take on debt that your income can’t keep up with, and you don’t want to be forced to liquidate the assets you’ve spent your whole life accumulating at a loss.”
It’s generally best to avoid financing everyday expenses with debt. Consider the cost of repayment, including the term, interest and any fees. Make sure you have a clear plan so you don’t risk defaulting on the loan.
Make sure you’re taking out the loan for the right reasons.
“If you’re already struggling to make minimum required payments on current debts, chances are high that taking on more debt (personal loan) won’t be helpful,” said Enright. “Instead, you may need to look into other help, such as debt settlement, which involves negotiating with creditors to lower principal balances due.”
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This article originally appeared on GOBankingRates.com: 8 Reasons Why Boomers Take Out Personal Loans
