A September 2019 study released by credit reporting firm Experian, one of the three major credit reporting companies in the U.S., looked at 210 consumers who were considering taking out a personal loan for the first time. Forty percent wanted the money for debt consolidation — that is, paying off existing loans, such as credit card balances, and replacing them with a single monthly payment, often at a lower interest rate. Similarly, a study of LendingTree customers, released in January 2020, found that around two-thirds of those who inquired about personal loans wanted to deal with debt in some way, with debt consolidation accounting for 35.7 percent of borrowing. Refinancing credit card debt to get a lower interest rate contributed another 31.4 percent of borrowing.
"Many people use personal loans to consolidate debts, much in the way that some people have used balance transfer cards over the years," Matt Schulz, chief industry analyst for LendingTree, an online marketplace that helps consumers to shop for and compare loans, including personal ones, says in an email interview. "Zero-percent balance transfer cards can certainly be a cheaper way to go, but for many folks who want nothing to do with credit cards after running up big debts over the years, personal loans can be a pretty appealing option."