Are pawn loan customers consumers? You bet they are and it’s great when reporters get their real story such as this recent one from Texas:
Without a pawnshop and a gold onyx ring, Patrick Heinaman’s grandmother might have missed her daughter’s funeral.
The short-term loan put the 412-mile trip to Port Lavaca within reach. It was costly, but her only option. But Heinaman’s grandmother and other lowincome borrowers would have a harder time getting an emergency loan of that type if the legislation Congress is considering to cap interest rates on all consumer credit transactions passes.
Both critics and supporters of the bills agree the popularity of payday lenders and other shortterm creditors highlight the need for credit among the country’s poor and their inability to obtain loans traditionally.
Two bills, one from Sen. Dick Durbin, D-Ill., the other from Rep. Jackie Speier, D-Calif., would cap interest rates on the loans at 36 percent. The legislation is aimed at payday lenders, but pawnshops and other short-term lenders say the cap would also keep them from making a profit.
“The way I see it, they help families that need the money,” the 19-year-old Heinaman said shortly after paying $50 off the balance of his grandmother’s loan at Danny’s Pawn and Sporting Goods in McAllen. “(Shutting them down), that’s like taking meals away from the family.”
The Capitol Hill elitists should listen carefully to the needs of the people exempt from what little mainstrem credit is left available in the US. Pawnbroking is not the problem, it’s a solution.
Tags: consumer credit, economic crisis, Federal APR Rate Cap, Pawn Loans, pawnbroker, pawnshop
