Loans

US Consumers Defer Payments On More Than 100 Million Loans

There are now more than 100 million skipped payments on student loans, auto loans and other kinds of debt, according to a report by The Wall Street Journal.

At 106 million total by the end of May, the number of skipped payments, deferments or other types of relief is now three times what it was in April. Student loans represented the biggest increase in non-payments, with 79 million accounts in some type of relief status, a massive upswing from the 18 million just a month before.

Elsewhere, WSJ reported, 7.3 million auto loans are in some kind of deferments, while personal loans hit 1.3 million in default. Both of those figures represent a doubling from what they had been the month previously.

The numbers illustrate the continuing effect the economic turmoil that the pandemic is having on individuals. The mass layoffs and furloughs since mid-March have likely left many Americans without the resources needed to pay their debts, with stimulus checks long since used up and unemployment benefits in many high-cost areas not enough to cover all the needed costs.

The government's financial aid packages have tried to curb those problems, with the CARES Act instructing most companies to let borrowers defer their loans and stop paying through the end of September, and homeowners allowed through the stimulus package to pause payments for up to 12 months.

But this won't be a solution forever, WSJ reported, as it has become more difficult for lenders to determine an applicants' risk due to the mass amounts of deferments, making it unclear who will eventually be able to pay back loans once the economy is in a better state. There is no one way of reporting people in need to credit reporting firms, and firms aren't supposed to be tying credit scores to pandemic-related difficulties.

Debt has been surging as of late, with recent statistics having it at $55.9 trillion, an 11.7 spike. Meanwhile, household values for individuals dipped 5.6 percent, totaling $111 trillion.

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NEW PYMNTS STUDY: LEVERAGING THE DIGITAL BANKING SHIFT – SEPTEMBER 2020  

The September 2020 Leveraging The Digital Banking Shift Study, PYMNTS examines consumers’ growing use of online and mobile tools to open and manage accounts as well as the factors that are paramount in building and maintaining trust in the current economic environment. The report is based on a survey of nearly 2,200 account-holding U.S. consumers.

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