ABS issuance for unsecured consumer loans (UCL) hit a record high in 2025, driven by fintech-originated marketplace lending and demand from private-credit-aligned sponsors.
Cumulative new issuance UCL ABS volume in 2025 (through December 15) reached $25.6 billion from $16.6 billion for 2024 as a whole, a rise of 54%, according to Fitch Ratings.
There was a surge in unsecured consumer lending in 2025. According to Transunion, in Q2 2025 unsecured personal loan originations rose by 26% year-on-year to 6.9 million, while balances rose by 8% year-on-year to $269 billion in Q3, the largest increase since Q1 2024. The consumer credit reporting agency said originations were strongest among riskier consumer tiers, with subprime originations up 35% and near prime up 26%.
Marketplace personal loans and buy-now-pay-later (BNPL) originations were the main source of unsecured consumer loans. Marketplace lending involves fintechs connecting borrowers to lenders for instant application approval.
Fitch estimates that fintech lenders originate and service half of all unsecured personal loan debt, ahead of banks (21%), credit unions (18%), and finance companies (8%).
Outlook
Moody's Ratings' 2026 Outlook - Slower economy and evolving credit quality pose risks report expects issuance growth of U.S. consumer ABS to slow in 2026. There will also be diminishing consumption growth amid higher inflation, still-elevated borrowing costs, weaker job and wage growth, and persistent affordability issues. Moody's expects consumer defaults to remain elevated and collateral performance to continue to deteriorate in 2026.
Yet the rating agency still expects risks to be contained. Job losses, falling interest rates, and accumulated investment and housing wealth will likely restrain loss risks, keeping new deal quality largely steady, Moody's said. It expects collateral deterioration in certain asset classes, due to investment demand from private credit.
"Private credit-aligned sponsors will contribute deals with varying credit quality, structures and disclosures, while their flexible funding and execution certainty have the potential to reduce issuance of more-traditional ABS," Moody's said.
According to Fitch, unsecured consumer loan ABS performance in 2026 should remain consistent with 2025, assuming unemployment remains stable and underwriting stays consistent. Lower interest rates may drive refinancing and prepayments, it said.
However, loosening credit standards to boost demand and a softening labor market could lead to higher delinquencies and defaults in the 2026–2027 pools, especially if rates remain higher for longer. BNPL's broader adoption could also result in weaker performance if borrowers' debt burdens become unmanageable, Fitch says.
Simine Arnfield contributed to this article.
