Archive for August, 2009
Cash for Clunkers = Deeper in Debt
Thursday, August 13th, 2009It didn’t take long for the lure of free government money to start taking its toll in the US. I’m already receiving reports from pawnbrokers around the United States who are experiencing an uptick in their pawn loan activity from new customers who drive up to the pawn shop in… you guessed it, a brand-new car. Along with a brand-new payment they had not budgeted for.
Bear in mind, these new pawn loan customers traded in their “paid for” clunker solely because of a government run program doling out taxpayer money, billions in taxpayer money, to induce these unsuspecting customers into an unplanned large purchase strapping them with yet more debt and little regard to the ability to make the monthly payment for the next several years.
If this sounds familiar to you, it should. This type of lending activity in the US is at least partially to blame for our current credit crisis, mortgage bust, and the real estate bubble exploding like a cannon. Will pawnbrokers be able to keep these new car consumers off the repossession list of the lenders? Time will tell, it remains to be seen. But at least for now, the pawnbroking industry will keep these cash for clunkers recipients driving instead of staring at their empty driveway wishing they still had the keys to their paid for clunker.
Pawn Shops Today Blog
Saturday, August 8th, 2009From a Blog Entry on Pawn Shops Today
The World Bank recognized in it’s report, “Key Principles of Microfinance”, that it costs much more to make small loans unless Microfinance Lenders can charge interest rate and fees that are
well above banks. “When governments regulate interest rates they usually set them at levels too low to permit sustainable Microfinance loans” (7) Senate Bill 500/HR 1608, as written, will in effect close the doors on 13,500 pawn/ retail businesses – that means another loss of 100,000
good paying jobs gone forever. The worst effect, it will close the only door 56,000,000 Americans will ever have to make small loans.
Under Senate Bill 500, Section 141.(2) tolerances should define pawn shop owners as micro finance lenders and allow for storage expense of pawned items. Every American has in some way benefited from pawn brokers, whether it was when Queen Isabella of Spain was turned down by her treasury to finance Christopher Columbus’ voyage to the new world and had to pawn her royal jewelry (8) or when we made a $300.00 loan to keep a small lawn service business in operation and off the rolls of the unemployed. Many Americans have never known the need for a $20.00 loan to buy a tank of gas or put food on the table so you can make it to the next payday. We have always had an important role in our country’s micro finance. Pawn brokers as a whole recognize the need for financial reforms, however as the Bill is written it will close down the good along with the greedy.
Robert G. Whitten, II
Chairman of the Board
The Reliable Source of Short-Term Credit
Monday, August 3rd, 2009From Borro.com
The established high street banks used to be perceived as solid and reliable, while pawnbrokers were viewed rather negatively. Now, it’s the other way round. When a secured or unsecured loan goes bad, it frequently leads to adverse credit ratings, debt collectors, court actions, bailiffs, asset seizures, repossessions – or worse! Unless it’s a pawn loan!
A pawnbroker will never sell you a loan you can’t afford, or leave you with a debt you can’t settle - one way or the other. Although a bank loan, overdraft or credit card might have a relatively low headline APR or interest rate, if you get into trouble, all sorts of punitive extras can be added, such as late payment charges and default penalties - plus interest! This can end up costing you more than a pawn loan, and making your life a misery in the process.
