Goldman Sachs has started marketing its personal loan product as a way to pay for home improvements, the latest step in the New York investment bank’s push to build a consumer lending franchise.
And in another signal that Goldman is looking to grow its footprint in personal loans, the bank recently raised the maximum loan size from $30,000 to $40,000.
The two moves put Goldman in a better position to compete for borrowers who want to make upgrades to their homes but do not qualify for a lower-cost home equity line of credit. LendingClub and Prosper Marketplace, two online lenders that compete with Goldman in the personal loan business, already target the home-improvement market.
Goldman launched its personal loan product in October 2016, and since then it has lent out more than $2 billion through a digital platform known as Marcus. Initially, the bank marketed the loans only to folks looking to consolidate credit card debt at a lower interest rate.
Today when prospective borrowers apply for a Marcus loan, they can select from several potential uses of the funds, including debt consolidation, making a major purchase, paying for a vacation and financing home improvements.
Loans secured by real estate tend to be a more affordable way to pay for home improvements, but they also have certain downsides. On its website, Goldman Sachs states that its personal loans get funded quickly, in contrast to home equity loans, which require appraisals and take longer for borrowers to get approved.
“By expanding the ways our customers can use our products to fit their needs, we look to continue to help them make smart financial management decisions,” Abhinav Anand, the head of lending in Goldman’s consumer banking unit, said Tuesday in a press release.