Personal Loans at Banks Slow, Sending People to Pawn Shops

[Feb 9, 2009.]

 

As many banks have tightened up standards for making personal loans, pawn shops are seeing an increase in middle-class and affluent customers coming through their doors. Many of the people looking to pawn items say they need money to make mortgage, tuition, and medical bill payments.

Mitchell Kushner, owner of Empire Pawn of Nassau in East Meadow New York, told Newsday: "A lot of people come in and start out saying, 'I've never done this before, but my husband was a stockbroker and was laid off.' They're embarrassed that for the first time in their life they have nowhere to turn and they need money."

People looking for fast cash can take an item to a pawn shop and will usually receive a personal loan for a period of time. If they don't pay back their personal loan during that period, the store can either sale the item or offer an extension on repaying the loan. Jewelry and construction tools are some of the more common items being pawned. 

Pawn shops often charge interest of about 4% a month, plus fees, for a four-month period, according to Newsday. Usually, the amount of this type of fast cash personal loan is for half the appraised value of the item being pawned.

In some cities pawn shops are required to send a description of all pawned items to the police to make sure they aren't stolen. In other places, police may inspect review pawn shop records to search for stolen items.

As the recession deepens many pawn brokers expect to continue to see an influx of people who've been laid off bringing items to pawn. "I think the economy is going to worsen and early spring will be when everyone is very hard hit," Veronica Cantwell, owner of William J. O'Neill Sales Exchange  in Patchogue, N.Y., told Newsday. "I'm not an alarmist, but I do believe we're going to see some difficult times ahead."

 

 

 

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.