More People are Delinquent on Personal Loans

[Jan 19, 2009.]

 

The amount of delinquent personal and other types of installment loans in the U.S. rose to a seasonally adjusted 2.9% in the third quarter last year, according to data from the American Bankers Association (ABA). People are considered delinquent on loans when they are 30 or more days late.

Delinquencies on indirect auto loans that are made through auto dealers and other third parties rose to 3.25%, a new record. The delinquency rate on home equity lines of credit (HELOC) grew to 1.15%, also a record. In addition to personal loans, the ABA report looked at credit card, boat, mobile home, and RV loans.

"With 1 million jobs lost in the first three quarters, and 2 ½ million expected for the year...the No. 1 factor in rising consumer credit delinquencies is job losses," James Chessen, chief economist for the ABA, said.

And the blood-letting isn't likely to end anytime soon. More consumers are likely to find themselves with deepening bad credit and defaulting on personal loans and other lines of credit. Although the Economic Advisory Committee of the ABA thinks the U.S. economy will begin to see some growth later this year, this recession may be the longest since World War II. The committee also said unemployment would probably rise to 8½ percent later this year.

Despite the recession there are many Americans who faithfully pay their bills on time each month. But unfortunately there are a whole lot of folks with good and bad credit who are struggling to keep up with their debts and other bills and that shows no signs of changing anytime soon. Many of these consumers who are keeping it together are only a paycheck or two away from being delinquent on personal loans and other lines of credit.

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.