Due to economic impact of COVID-19, more Americans are taking out home-equity and other types of loans, according to a new study by WalletHub.
"Americans who are having trouble with their finances during the COVID-19 pandemic are searching for all sorts of options to relieve the pressure, from home equity loans to payday loans," according to the report. "However, people’s interest in getting these types of loans varies from state to state. In order 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."
Here is what the researchers discovered:
The residents of these 10 states are most likely to seek a home equity loan:
Connecticut, Minnesota, New York, Indiana, Alabama, Kansas, Virginia, Florida, Michigan, and Iowa.
The report breaks down the loan searches for 51 states.
For the report, WalletHub consulted several experts soliciting their opinions on the relative safety of taking out loans of any type. None of them recommended seeking payday loans or even home equity loans, but rather recommended borrowing from family and/or acquaintances when possible, or a credit union.
"If a person has a trust financial institution or bank, I would suggest meeting with a loan officer to assess what the credit implications might be," said Frank H. Shafroth Director, Center for State and Local Government Leadership at George Mason University.
Wallet Hub also asked the experts "what policy interventions can be taken by local authorities in order to help those in need financially during this economic downturn?" To which Shafroth replied, "Adopting a policy which permits deferral of property foreclosures: that was a critical element in Detroit’s recovery from the nation’s greatest chapter 9 municipal bankruptcy – otherwise, forcing people out of their homes could put them at greater risk of catching the virus and infecting many, many others.
The study can be accessed in full on the WalletHub website.