Loan Defaults Hit High

As of early April, there have been skyrocketing numbers being reported as to how many consumer loans are being defaulted on and how many are also more than thirty days late. Since this is just what some economists think is the beginning of huge job losses, these numbers very well may rise even more in the coming months and even the whole next year or so.

The numbers of unemployment and jobs lost in April was also staggering, with almost 700,000 more people losing their jobs in the latest report, which depending on where you read, was less than or greater than expected (who can keep track any more, it seems like even our different media outlets are always conflicting on these numbers). Because of this latest increase in jobs lost, lenders expect that their defaults will again go up and reach new heights, and many lenders are still gun shy about lending for this very reason. Ironic, because this recession is really just prolonging itself by the reactions to the worsening economic news.

Top economists say that the greater the job losses become, the more severe the economy will contract, since creditors will be holding customers to way higher standards, and also will be losing money hand over fist due to defaults and late loan payments, missing out on both principle and interest payments. It is said that this last quarters report was the highest in defaults since the numbers started being tracked in 1974 (hey that’s the year I was born – fun fact).

When they talk about consumer loan defaults, they mean a lot of different things. For one thing, it’s auto loans that are made for the purchases of new cars (this one is fairly common, especially considering psychologically how people don’t think a car is necessary when it comes to stripped down necessities), credit cards, lines of credit, store credit cards and other consumer related credit extensions. They don’t think that the creditors will see any form of relief until 2010.