People waiting in line to enter a grocery store wear COVID-19 protective masks July 3, 2020, in McCandless, Pennsylvania.
(The Center Square) – For Pennsylvanians facing financial difficulties during the pandemic, it may appear that there are few options to ensure that bills are paid. That may be leading many to look to taking out loans in an attempt to get by.
That’s according to a new report from WalletHub, which published an analysis that looked at a set of metrics for each of the 50 states to rank them by how much their residents are seeking help from lenders. Pennsylvania came in 13th overall in the rankings.
“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,” WalletHub’s Adam McCann wrote. “However, people’s interest in getting these types of loans varies from state to state.”
The overall metric consisted of four broad categories, and Pennsylvania’s finish in each was a bit varied:
• Loan Search Interest Index: 31st
• Payday Loans Search Interest Index’ Rank: 20th
• Home Equity Loan Search Interest Index’ Rank: 11th
• Change in Average Inquiry Count’ Rank: 15th
“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,” WalletHub analyst Jill Gonzalez 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.”
WalletHub is a financial information website and compiled its own credit report data with data from Google Trends to compile the rankings.
Neighboring New York finished first in the rankings, meaning its residents were most inclined to borrow, while Vermont landed at 50th. Other states in the Northeast, including New Jersey (19th), Massachusetts (36th) and Connecticut (38th) landed somewhere in the middle.
WalletHub contacted Jesus Salas, an associate professor of finance in the Perella Department of Finance at the Lehigh University School of Business in Bethlehem, Pennsylvania, to comment on their analysis. Salas warned that given the amount of economic uncertainty that exists with the virus still a threat in many states, taking on a loan right now might be a bad idea.
“People should understand there is a probability that they will not be able to pay back that loan,” Salas said. “People could easily be forced to declare bankruptcy and people should be very well aware of this possibility.”
He suggested that getting the economy back up and running is the single best thing that governments can do to help residents who are struggling financially.
“The economy should reopen as soon as it is practically feasible,” he wrote. “The virus will re-surge regardless of when the economy reopens. The government should check hospital capacity as it reopens. The governments simply does not have money now (given high unemployment). Until the economy reopens, it does not make sense for the government to simply borrow to make sure everybody pays all their bills (food, mortgages, salaries, etc.).”