Coldcash for hard times AH:Area's pawnbrokers say higher gas priceshelping boost business
Wednesday,April 26, 2006
Edition:FINAL, Section: NATION, Page A1
OnTuesday, President Bush asked the Energy and Justice departments toinvestigate possible manipulation of gasoline prices. But that'slikely to be little consolation to those who are so desperate to filltheir tanks that they have turned to Charleston area pawnbrokers asbanks of last resort.
"Everybodycomplains about it," said Bonita Winters, a sales associate at CashAmerica Pawn in North Charleston. "I'd say 50 to 75 percent of thepeople who come in are saying that's their reason for coming in.We're overstocked on tools and bicycles and people are bringing inDVD players, movies, video games and lots of tools. Anything they canpawn to try to get enough for gas."
Though businessdoes not appear to be in a gas-related boom across the Lowcountry,Winters and the managers at several local pawnshops said thatcustomers are eager to drop off collateral to support relativelyhigh-interest, short-term loans or to sell their goods altogether.
A browse throughthe electronics section of Cash America, Money Man or Gene'sJeweler's and Pawn can tell the story.
"If the economyis good, our loan business suffers," said Mike Bond, supervisor for10 Lowcountry-area Money Man Pawn Shops. "But if it's bad, weprosper."
While Bond saidthat it was too early to tell if the recent 15 to 18 percent increasein his stores' business has had to do with loans to pay taxes or painat the pump, he suspects that high gas prices are surely driving partof it. He went on to point out that the recent jump in prices hasbeen so abrupt, as much as 25 cents last week, that he likely has yetto see the crest of the wave. "I haven't heard as much complaining asthe last time gas peaked above $3, but I'm sure it's coming," hesaid.
At Gene's Pawn onRivers Avenue, sales associates said that many customers have saidthat
gas prices hadsent them in for a short-term loan, or to sell lawn mowers, stereos,video games or even surfboards and water skis. President Travis Sternsaid that his business was not up substantially, but he expected thatas prices continued to climb into the summer driving season, he willsee an uptick. He said that some customers were simply taking outslightly larger loans than usual to cover gas.
"Today, agentleman came in who had a metalworking job," Stern said. "He saidhe had to have more than he would have otherwise because of gas, buthe still needed the loan anyway. Money's just not going as far as itnormally does, and I don't think there's going to be a lot of goodnews to report on gas prices for awhile."
Back at CashAmerica, associate Andrew Braun said that customers have been pawninggoods for gas since last year, particularly any time the price risesabove $2.50 per gallon. He said that gas prices simply add to theburden many of his customers face simply paying for medical bills andfood.
"A lot of peopleare poor," Braun said. "And this is driving season. When you'reliving day to day in Dorchester County, and the poverty line is veryclose to home, $20 can make a lot of difference."
Chatting withWinters was a frequent loan customer and truck driver who would onlyidentify himself as "Big Daddy."
"Gas just adds toit," he said. "People are selling everything they have to pay lightbills and rent — just to make ends meet."
"I have to drivedown here from out in Hanahan," Winters added. "I think I'm going tohave to take out a loan for myself."
Reach Chris Dixonat 745 5855 or firstname.lastname@example.org
Pawnshops dobusiness in two ways. Their primary source of income is inhigh-interest, collateral-based, short-term loans for relativelysmall amounts of money. If a person needs a quick $500, he mightbring in a guitar for collateral and face as much as a $65 monthlyfee, or around 22 percent interest, to support the loan. On a $100loan, that would equate to roughly $22 per month. If the borrowerdefaults, the pawnshop gets the item. Pawnshops also simply paypeople who bring in merchandise, such as stereos, car rims, lawnmowers and jewelry. The pawnshop pays for the merchandise and thenturns it around for a profit.