Pawning Pawn Stores

December 12, 2013 in Daily Bulletin

The Economist took a look at the pawnbroker industry:

  • In Britain several pawnbrokers are facing financial difficulties. One has essentially pawned itself by putting itself up for sale.
  • This is in part due to the easing of the global economic slowdown – lowering demand for pawnbrokers.
  • The price of gold – and thus the jewelry that pawnbrokers frequently receive – has also fallen further cramping their ability to pay off their debts.
  • However the industry should bounce back and is doing well in the US since the basic business is sound.
  • Pawnbrokers offer individuals a line of credit without needing to have proof of income or threatening their credit ratings.
  • They’re a business geared towards those with lower incomes – just like payday lenders. But they “only” charge about 90% in effective interest – payday lenders charge 6,000%

Read more about the industry and its outlook over here.

Source: The Economist