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Using Trust To Engage Consumers Impacted By Personal Debt & Encourage Action
U.S. consumer debt is currently more than $14 trillion, although consumer delinquencies remain low. “Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion in the first quarter of 2020, driven mainly by non-financial sector debt,” the Institute of International Finance (IIF) noted in a new research report.
For individual consumers, managing their debt can lead to the need for personal loan products and alternative payment methods.
Post-Pay Platforms Offer An Option For Cash-Strapped Consumers To Make Purchases
The increase in personal debt has created a need for new kinds of payment options, generating openings for financial tech (fintech) companies. Ecommerce deferred payment platforms, or point-of-sale loans (POS loans), allow consumers to buy items they couldn't otherwise afford by breaking purchases into smaller installments. Afterpay is among the largest of these platforms and is invested in providing buying opportunities to consumers without using complex lending practices.
Klarna and Affirm are other leaders in the deferred payment platform industry, committed to creating a kind of “reverse lay-away” that allows consumers to afford and feel good about purchases they may need, while handling personal debt. Deferred payment platforms increase basket sizes for ecommerce partners and are particularly popular with younger consumers who may be balancing new college loans with starter salaries and don’t want more (or any) credit card debt.
Personal Loans Are An Option For A Wide Variety Of Consumers
For some consumers, the best option may be turning to a personal loan as a potential solution to manage or eliminate their debt. There are many loan platforms on the market that allow consumers to compare lenders and rates and choose loans from $1,000 to $100,000. In general, personal loans tend to be available regardless of credit score, offering different repayment options and interest rates based on the applicant’s financial history.
For financial product marketers, it’s important to understand that the personal loan market appeals to consumers from all walks of life. Personal loans can be used to pay off medical bills, credit card debts, unexpected emergencies and other outstanding obligations, as well as paying for upcoming life events like weddings or adoptions that would otherwise be difficult because of personal debt.
Authentic Brands Can Build Trust With Consumers Struggling Under Debt
Brand trust is an increasingly important factor for consumers when choosing what to buy, and may be especially important when consumers are pinching pennies. Transparency and authenticity can help brands connect with consumers impacted by debt.
According to Statista, “debt held by the U.S. public has dramatically risen since 2008, and this trend is set to continue until 2029,” which means that personal debt will continue to impact how brands and marketers relate to consumers who are tightening their belts. Whether it's offering post-payment solutions or showing respect for consumers regardless of their financial health, there are opportunities for marketers and brands to offer relief to consumers who may be burdened by debt.
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