FinTechs Ride $276B Subprime Wave as Delinquencies Tick Up

Balances and loan originations for unsecured personal loans are reaching record highs, and subprime borrowers are driving both trends.

Unsecured personal loan balances increased to a record $276 billion in the fourth quarter of 2025 with 26.4 million people carrying loan balances. Subprime borrowers led this loan balance expansion with a 17% year-over-year increase, according to TransUnion. 

Unsecured personal loan originations reached 7.2 million in the third quarter of 2025, marking the second straight quarter of new highs. Subprime borrowers drove this growth with a 32.5% year-over-year increase in unsecured personal loan originations, according to TransUnion.

“As interest rates began to fall, many consumers are consolidating their credit card balances into unsecured loans,” Michele Raneri, Vice President and Head of U.S. Research and Consulting at TransUnion, told Reuters. 

Other Factors for the Growth of Personal Loans

In addition to subprime, unsecured personal loan originations rose in near prime and super prime segments with each growing by 21.5%. So consumers across the credit spectrum are reaching for unsecured personal loans to help manage their finances.

FinTech also played a role, holding a 42% share of unsecured personal loan originations. This was up from roughly one-third a year earlier.

“More Americans are turning to unsecured personal loans, and lenders are meeting that demand with stronger risk management,” said Josh Turnbull, Senior Vice president, Consumer Lending Business Leader at TransUnion.

“FinTechs remain the most active issuers, and even at elevated growth levels, especially among non‑prime borrowers, performance reflects disciplined underwriting and recalibrated risk strategies.”

Delinquencies on Unsecured Personal Loans 

If payments on an unsecured personal loan are more than consumers can handle, they may become delinquent, 60 or more days behind on payments. 

According to TransUnion, the delinquency rate on unsecured personal loans rose to 3.99% in the fourth quarter of 2025, up from 3.57% a year earlier. This was the largest year-over-year increase since early 2023. The subprime segment had the sharpest increase of about half a percentage point. 

To sum up, the subprime segment is driving unsecured personal loan balances, loan originations, and delinquencies. This is something for lenders who are actively underwriting these kinds of loans to consider. 

What’s Behind Personal Loan Borrowing?

Some consumers are using personal loans to get by. TransUnion’s Raneri told Reuters that lower-income consumers are using personal loans as a stopgap measure to help manage the higher cost of living.

For middle class consumers, personal loans may be a way out of high interest credit card debt.

“Personal loans have truly become the middle-class refinancing option for high-interest credit card debt. That’s why they’re growing exponentially,” said Jim Triggs, CEO of Money Management International, a nonprofit credit counseling organization, told CNBC.

The Bottom Line

Subprime consumers are having a big impact on unsecured personal loans. They are the driving force behind high levels for personal loan balances, loan originations, and delinquencies. 

Unsecured personal loan balances reached a record $276 billion, and loan originations reached 7.2 million. The subprime segment also had a sharp increase in personal loan delinquencies.