Personal Loans Shift Toward Everyday Expenses, With Gen Z Borrowers Most Affected

LendingTree’s analysis of online loan inquiries (April 2025 – March 2026) shows 8.2 % of personal-loan requests were for routine expenses such as groceries, utilities and rent, more than double the 3.4 % share in 2023. This purpose now ranks fourth among reasons borrowers seek a loan.

Newsweek

Inflation was 3.8 % in April while wages rose only 3.6 %, shrinking household purchasing power. High housing and energy costs have squeezed budgets, prompting borrowers with low credit scores to seek short-term financing. Among everyday-bill loan requests, 57.5 % came from borrowers below 580 and the average applicant’s credit score was 574, well under the national 713 average. The typical $4,317 loan is projected to cost about $5,500 after interest.

Newsweek

Gen Z borrowers accounted for 10.5 % of everyday-bill loan requests, versus 9.3 % of Millennials, 6.6 % of Gen X and 5.6 % of baby boomers. Louisiana (10 %), New Hampshire (9.8 %) and Pennsylvania (9.7 %) had the highest state shares; Nevada and Oregon were lowest at 6.2 %.

Newsweek

Ali Zane said Gen Z’s borrowing reflects high housing costs, stagnant wages, and a labor market scarred by the 2008 recession, student-loan debt and the COVID-19 pandemic, not reckless spending. Ashley F. Morgan noted younger adults entered adulthood amid soaring housing prices, inflation and rising interest rates, and that fintech tools such as buy-now-pay-later and paycheck-advance apps have become normalized financing options for this cohort.

Newsweek

Critics warn that reliance on short-term personal loans for basic needs can deepen debt cycles, especially for subprime borrowers whose repayment capacity is already strained, potentially raising default rates and broader instability.

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One borrower took four personal loans within eight months for car repairs, medical bills and routine expenses, resulting in a 187-point credit-score drop over two years.

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The findings rely solely on LendingTree’s online inquiries, with no comparable data from other lenders, credit unions or government surveys, and they do not track repayment outcomes, leaving broader prevalence and long-term effects uncertain.

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• “There is nothing about Gen Z being spendthrift and careless in the data stating 10.5 percent of Gen Z personal loan requests go for everyday expenses against 5.6 percent of such loans for baby boomers,” — Ali Zane, CEO of IMAX Credit Repair Firm.

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• “First, younger consumers generally entered adulthood during periods of extremely high housing costs, inflation, student loan burdens, and rising interest rates,” Morgan told Newsweek.” — Ashley F. Morgan, debt and bankruptcy lawyer.

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• “Personal loans, BNPL products, and app-based financing options have become normalized financially for younger generations in a way they were not for many older borrowers,” — Ashley F. Morgan.

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• “It seems pretty logical for people to seek personal loans in December because of holiday expenses," Zane said.” — Ali Zane.

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LendingTree plans a 2026 study to track loan-request trends, while consumer-protection agencies are expected to review the growing reliance on short-term credit for essential expenses.

Newsweek