Pawn shops making fewer loans, cashing more checks
Business during pandemic not what pawnbrokers were expecting
TALLAHASSEE, Fla. – During every economic downturn over the last 50 years and perhaps longer, many people turn to pawn shops for a quick loan to tide them over. And while pawn shops are bustling these days, it’s not because people need money.
Just the opposite happened.
“We’re actually having people pick up (their) loans rather than make new ones,” said Mark Folmar, owner of Folmers Pawn Shop in Tallahassee.
Loans are down between one-third and 50%.
“More people are eating at home, doing everything at home and I think some of our expenses are less. Gas is less. They’re not having to go to work. A lot of people are not having to pay day care," Folmer said. “So you just have a strange combination of things that has actually left certain segments of the population with more money than they normally have.”
Folmar’s has cut hours and trimmed staff as loans have fallen. The cuts would have been deeper but the check cashing business is booming.
“We’re seeing the stimulus checks and then we are seeing a lot of the $600 unemployment checks and the state unemployment checks,” Folmar said.
With extra money in their hands, the people that usually pawn items during a crisis are buying.
“Any type of video game, TVs, stuff people can do from home to entertain their kids,” he said.
Call it Christmas in May.
But there is still a need. David, who only wanted his first name used, said his disability check was two weeks late.
“I got no food,” he said.
If the pandemic has put you in a pinch, remember that pawning something is not a long-term solution.
It’s not cheap. Small loans can cost 20% to 25% a month.
A second round of stimulus payments is likely to keep this trend at pawn shops going into the summer, depending on how large the payments turn out to be.
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