U.S. consumers are increasingly turning to unsecured personal installment loans, including options like Buy Now, Pay Later (BNPL), to help manage their spending. Alternative lending products can provide financial opportunities for those who might otherwise be overlooked by or unable to access traditional forms of credit. But they often come with higher costs and don’t always help build consumer credit scores.

Drawing on data from the Federal Reserve’s 2022 Survey of Consumer Finances, where one in five households reported having a personal installment loan, this brief examines the contexts and patterns of these borrowers. We find that usage is higher among Black and Hispanic families and those experiencing financial insecurity, particularly people who have been denied traditional credit or who have struggled to stay current on their bills. Knowing who is using installment loans and why is important to understanding the state of accessible and affordable credit for U.S. households.