Record levels of credit card debt, rising interest rates and a proliferation of alternative lenders are making personal loans the fastest-growing category of consumer debt products.

According to the J.D. Power 2019 Personal Loan Satisfaction Study released Monday, many of these alternative lenders are upping the ante on customer satisfaction by outperforming lenders that provide more traditional loan types, such as home equity lines of credit (HELOC), through superior digital experiences and lightning-fast approval times. However, alternative lenders still face negative customer perceptions about reasonableness of fees.

The inaugural survey found that digital has become the most common channel used for personal loan applications, with 40 percent of personal loan customers applying entirely online. The U.S. personal loan market was estimated at $141 billion in 2018 and is projected to grow steadily.

The study, based on responses from 3,413 personal loan customers, was conducted in December and January. It evaluated customer satisfaction with personal loan providers and explores the key variables that influence customer choice, satisfaction and loyalty based on four factors, which in order of importance are: interaction; billing and payment; loan offerings and terms; and application and approval process.

Among key findings:

– Overall satisfaction is highest among personal loan customers in the digital-only segment (886 out of 1,000 points), which also has the highest percentage of applicants who indicate that they completely understood the application (91 percent). A complete understanding of the application is associated with a 137-point increase in customer satisfaction.

– Fast and efficient funding is critical: Receiving loan approval within two days is associated with a 55-point jump in customer satisfaction, and receiving funds within two days of approval is associated with a 50-point jump in customer satisfaction. By contrast, customers report the total average time for HELOC funding to be approximately 26 days from the time of application.

– Customers will consider alternate products: Despite the reported benefits, customers choosing personal loans are still not locked in to the product when shopping for their loan. Nearly half (47 percent) of such customers also considered competing products, 28 percent considered credit cards, 17 percent considered personal lines of credit, and 13 percent considered HELOCs.

“Given that half of all personal loans are used for debt consolidation or to pay off a credit card, it’s crucial that lenders get the customer interaction formula right with easy-to-navigate digital applications and rapid approval processes,” said John Cabell, wealth and lending intelligence practice lead at J.D. Power. “From a digital perspective, traditional banks need to work hard to meet evolving customer expectations.”