November 20, 2009

Pawn Shops Threatened By Senate Bill

Tools

By KSEE News

Story Published: Apr 8, 2009 at 9:55 PM EST

Story Updated: Apr 8, 2009 at 9:55 PM EST

A bill in the U.S. Senate would cap interest rates at 36% yearly. One industry says the cap could put them out of business. Pawn shops make short term loans and use people's property as collateral. The owners say that, while 36% seems high, most of the loans they make are short term, and putting a 36% limit on them would make a lot of their small loans unprofitable for them.

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"We can always still buy and sell stuff. But this is going to force customers to sell their stuff when they want to get it back," said Rob Vangronigen of the Fresno Hock Shoppe.

Vangronigen says if this bill gets approved, it would cut down 60% of his business. And his business relies on three things; buying items from customers, selling it back or offering loans with items used as collateral.

"You know every dollar counts right now," said Chris Dorian who brought in his gun to sell.

The shelves are filled with power tools. This is indicative of the slowdown in the building industry. Vangronigen expects to sell these tools soon as the economy starts to turn around.

Also on the shelves are musical instruments, flat screen tvs, and hundreds of pieces of jewelry. The shop owner says the market is great for gold.

But right now the future success of pawn shops hang in the balance as the senate debates a pro-consumer bill.

View Oldest Comments First

Tuesday, May 5 at 2:36 PM Brenda wrote ...

We charge 20% interest a month and barely get by, I cannot imagine 3%!

Saturday, May 2 at 8:35 AM gail wrote ...

i agree 100% with richard

Wednesday, Apr 15 at 8:02 AM Joseph wrote ...

How can I take a 50" big screen in and loan $500, insure it, store it for 30 days, lug it out of storage and help the customer load it back up for $15.00 ? I would have to take this item in 73 times throughout the year just to pay for my city and state license ! You can loan a million dollars a year with a 10' by 12' cubical if your a Payday Loan or a Title Loan but you will need a minimum 5000 sq. feet to do that same amount with a Pawn Shop loan unless you do only jewelery !

Tuesday, Apr 14 at 4:52 PM Jill wrote ...

Why can't the owners just charge more fees to make up for the lack of interest and if they cant write loans...make policy that they sit in inventory for 30-90 days, depending on the item and give the owner first dibs on layaway!

Friday, Apr 10 at 9:53 AM Richard wrote ...

As a pawn shop owner I agree that it will basically shut us down. 36% sound like a lot and if I had as much loaned out as Chase does I could work with it but with 40K loaned out you wind up with a tad over 1K a month income. That won't even pay the rent.

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