Continued Growth in the Pawn Industry. Loan Size Up 88% To US$150 Since 2008
In Michigan and many other states, pawn customers pay a maximum interest rate of 3 percent per month. Of course, a 3 percent interest rate works out to a 36 percent annual rate. A typical rate can be much higher in unregulated states — about 10 percent for a 30-day loan, according to National Pawnbrokers Association spokesman Emmett Murphy.
This was reported in the August 2, 2013 edition of Bloomberg Wealth Watch in an article titled ‘The Ever-Enduring Pawn Shop Business’ by Ben Steverman which aptly speaks to the growth of the Pawn business in the United States. They continue;
Market researcher IBISWorld estimates the U.S. industry’s revenues rose 15 percent from 2007 to 2011, twice the average sales growth of the S&P 500. Meanwhile, a net new 1,500 shops opened, bringing the U.S. total above 11,000. And last year, the average pawn loan was $150, up 88 percent since 2008, according to the National Pawnbrokers Association.
We previously reported on the pawn business, and the possibility of building a similar pawn industry here in the Caribbean. Read: Singapore Based Pawnbroking, Jewellery & Watch Trading Company ‘MoneyMax’ Goes Public
Lack Of Savings And Bank Accounts Force Customers To Pawn
It would be far better for pawn customer bottom lines if they had an emergency fund of cash to draw on instead, of course. Yet 11 percent of U.S. consumers have no bank account, according to the Federal Reserve, and another 11 percent are considered “underbanked” because they rely on alternative financing like check cashers and pawn shops.
“Where else are you going to go?” asks Les Gold, star of TV show “Hardcore Pawn ” and the owner of a Detroit pawn store. “People get caught up. They overextend themselves.” Pawn a watch on Monday and you can make a car payment on Tuesday, so that you can still get to work.