Top 10 States Where Consumers Expect to Need New Loans
Greater interest in getting a loan indicates that more people in the state are financially struggling during the pandemic.
WalletHub recently released new research that shows the top 10 states where consumers are expected to need loans because of the COVID-19 health and economic crisis.
The No. 1 state is New York, followed in order by Maryland, Illinois, Virginia, Indiana, Minnesota, Washington, Alabama, Kentucky and North Carolina.
To determine the states where people are searching for loans the most during the pandemic, WalletHub compared the 50 states and the District of Columbia across four key metrics. These metrics combine internal credit report data with data on Google search increases for three loan-related terms: Loan, payday loans and home equity loan.
“New York ranks first for overall interest in loans during the pandemic, which is surprising because the state has had the 18th highest recovery in unemployment since the pandemic started, despite being the hardest hit by the disease itself,” Jill Gonzalez, WalletHub analyst, said.
Greater interest in getting a loan indicated that more people in the state are struggling to make ends meet. It also implied there may be more strain on the state’s public assistance programs in the near future, and the state may experience a deeper recession than others will, according to WalletHub.
The bottom 10 states where consumers needed loans the least were Nebraska, New Hampshire, Maine, Idaho, Montana, Delaware, North Dakota, Wyoming, Rhode Island and Vermont.
“It makes sense that people in Vermont are searching for loans the least during the pandemic. Vermont’s economy is only the 40th most affected by coronavirus, and it has experienced the fourth-highest recovery in unemployment since the pandemic started, according to recent WalletHub studies,” Gonzalez explained. “Since Vermont is struggling less than many other states are, its residents naturally have less need for loans.”
She noted, however, that there is expected to be an increased interest in loans from consumers once the extra $600 per week in unemployment benefits expires at the end of July.
“Right now, many people are getting paid more while unemployed than they did while employed, so there should be an opportunity to save cash and avoid loans,” she said. “We should not forget that parts of our economy will not recover until we have a vaccine for COVID-19, so it is important that reasonable unemployment benefits continue through that period.”
Based in Washington, D.C., WalletHub is a personal finance website.