It 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.
Tags: Cash for Clunkers, consumer credit, Credit Crunch, Pawn Loans, pawnbroker, pawnshop
This is a ridiculously false, rumour mongering, and rabble rousing blog statement: The Government did not “induce these unsuspecting customers into an unplanned large purchase”.
All customers know full well their ability to pay or not and if they can’t afford a new car, make these transactions out of personal ego and greed. The Government can not be the scape goat for one’s own personal integrity and financial responsibility, characteristics which are disappearing at large in society today.
Terri, I appreciate your comments. Just remember one thing. I did not make this up, I’m just reporting what is happening. And if the government program did not exist, these folks would still be driving their paid for clunkers. Best regards, Steve Krupnik
Steve, Speaking from a State where (unfortunately) vehicle title lending/pawning is legal, the customer must have CLEAR TITLE to the auto with no lienholder in order to pledge it as collateral. So as you report, if these individuals have ‘cash for clunkered’ themselves into a CAR PAYMENT they end up not able to make, the vehicle is going to be repossessed by the lienholder….not a pawnbroker. I’d be curious as to what state law allows borrowing against something that is already encumbered? Regards, Fran Bishop
Again Steve, the Government cannot be held responsible for individual conduct. Fran is correct in her statements, you can’t pawn what you don’t have title to. Regards, Terri Pulley
Terri, I agree with you, and these customers are not pawning their car, they are pawning what they own to pay for it. Every day pawnbrokers deal with millions of very good people with very bad problems because of excess debt. Would these people be forced to live within their means without pawn shops? Of course not. They would just turn to unregulated sources for short term credit. Not a good option!
Of course, for the last 100 years or so in the US, it appears the Government cannot be held responsible for ANYTHING, including mismanaged programs that MAY cause a consumer to make a poor credit choice. The consumer makes the choice, the Government provides the temptation.