Goldman Sachs’ Marcus Personal Loan Hits the Mark as Other Lenders Struggle
- December 3, 2017
- Posted by: Andrew Rombach
- Category: Personal Loan News
Pictured above is a Goldman Sachs location.
When Goldman Sachs launched Marcus, a personal loans product, a little over a year ago, it set an aggressive goal: lend $2 billion by the end of 2017. And while competing online lenders have reported a series of losses since then, Goldman announced this month that Marcus has hit that milestone.
Marcus is billed as a simple process with a fast turnaround time. Borrowers who qualify can access their funding in as little as one week after applying. Marcus offers loans from $3,500 to $30,000 on an unsecured basis, meaning they don’t require collateral such as a car or house. Borrowers must make monthly fixed payments, and interest rates range from 6.99 percent to 23.99 percent. On the Marcus website, a sample loan of $15,000 at 13 percent APR is estimated to cost a borrower $19,312 at the end of a 48-month term. Interest rates for Marcus loans are similar to what major banks and credit cards charge for unsecured lending.
While Marcus has been soaring, other online lenders have been struggling. Lending Club, Prosper, and OnDeck all reported losses over the past 18 months. Such loan companies are also under added scrutiny, as financial regulators are watching closely for predatory online lending practices.
This isn’t the first time Goldman Sachs has made the news either. The launch of Marcus made headlines for its innovative marketing tactics, and CEO Lloyd Blankfein lent his voice to a promotional phone campaign in the weeks surrounding the launch.
When the online lending boom began in the late 2000s, consumers had limited options. Ten years later, Marcus is poised to dominate the market despite a late entrance and falling profitability from its competitors. Goldman Sachs is one of the lions of Wall Street, so consumer lending on a smaller scale might seem to be an unlikely venture for the firm. But the numbers show there is profit to be made in the sector, and Marcus seems to be a success after a strong start.
In the coming months, Goldman plans to merge its online deposit business, GS Bank, into the Marcus brand, as well. For the American consumer, it seems the competition from online lenders is driving bigger firms to invest in consumer lending platforms.
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