We’ve suspected it; after all, there are so many Americans who are struggling financially and who no longer have access to traditional financial products like checking accounts and credit cards. Now, though, we’ve confirmed what we’ve suspected for months: more Americans are turning to and relying on pawn shops and payday cash advance companies.
In some ways, it’s like a yo-yo; times get a bit better and human nature tells us we can celebrate with whatever the latest craze is: iPhones, computers and even new cars. The problem is, in an uncertain economy, no one knows how long those “better times” will last. Suddenly, many are finding themselves wondering how they’re going to cover their monthly financial obligations. The solution is pawning those new gadgets in order to cover the less than better times. The goal, of course, is to retrieve those shiny new “happies” before the month is up.
650, no, 750
Banks continue to rein in requirements. If a 650 credit score was the approval cut-off two years ago, then last year, it might have been 680. Now, though, with an economy that’s not improving, despite certain tell-tale signs that say it is, banks are now saying they don’t want to consider anyone with less than a 720, 740 or even a 750 credit score. Now, instead of running to their community bank for a quick signature loan to tide them over in the leaner times, folks are running to their local pawn shops to pledge jewelry, electronics and even car titles for quick cash. And those who might still have access to their checking accounts might instead choose a high-interest cash advance from a check cashing store.
And if there was ever an image that pawnshops portrayed, such as being “un-mainstream”, they’re now front and center – and the first choice for millions.
Guns and Gadgets
Not only that, but people who might never have considered walking into a pawn shop are increasingly finding themselves browsing the aisles for used guns, gadgets and even jewelry. With so many who are either unemployed or underemployed, pawn shops have been the only saving grace for many. Gone are the days when the most a pawn shop could lend on anything was a few hundred dollars; today, many are high end, technologically drive showcases for accepting big ticket items and they’re lending higher and higher amounts for those higher end pieces. It’s a gamble for both the pawner and the pawnee. If a consumer pawns his $800 power rifle, he might accept, say, $500 – he knows it’s worth more, but he also knows those are the rules. If he doesn’t come back and claim that rifle, the pawnshop has to have room for a profit. The pawn shops are gambling on being able to sell what’s not claimed.
So technologically advanced are pawn shops these days that they’re online. Loans are being made via high speed internet. The would-be customer would provide a photo or description, the pawn shop lets him he’s willing to lend money on it, provided it’s what was described. The consumer then ships the item to the shop and waits for a deposit into his checking account. And if you think these aren’t exactly mainstream yet, you should know there are more and more of these online pawn shops popping up around the country.
Write a Check
But what if you don’t have or can’t part with those valuable items? Many can’t imagine not having their jewelry at home and don’t want to trust that pawnshop won’t be robbed or worry about not being able to reclaim their things after the time has lapsed. Many will instead write a post dated check to a check cashing company. They, too, are taking a gamble. If they aren’t able to secure the funds by the time the expiration date rolls around, they must renew the loan – and it gets quite expensive. The check cashing company is gambling on there being a bank account that’s still open and flush with cash by the time they’re ready to deposit it.
So what are people doing with the money after they’ve pawned their ring or signed that post dated check? Naturally, it makes sense that it would be quite important if they’re willing to go to those lengths. Folks are paying their light bills and buying groceries and even paying their insurance premiums to keep from being canceled. Others are covering expenses associated with job searches. Whether it’s gas money to get to an interview or even postage stamps to send a hard copy of a resume to an employer, they’re using those funds wisely – even if there are many who weren’t quite as wise when they had the money to spend on the $500 iPhones.
So have you turned to one of these nontraditional choices? Would you do it again? Share your story wit us – we want to hear it. Leave us a message in the comments or join the discussion on Facebook.
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