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Pawn Shops Make Fewer Loans, Cashing More Checks

May 18th, 2020 by Mike Vasilinda

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.

Pawn brokers expected the same when the pandemic hit, but they got a big surprise.

Pawn Shops are bustling these days, but not because people need money.

It’s just the opposite.

“We fully expected with everything that is happening that we would have a huge demand for loans. We’re actually having people pick up loans rather than make new ones,” said Mark Folmar, owner of Folmers Pawn Shop in the state capital.

Loans are down between a third and 50 percent.

“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 daycare, 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,” said Folmar.

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,” said Folmar.

With extra money in their hands, the people usually pawning during a crisis are buying.

“Any type of video game. TV’s. Stuff people can do from home to entertain their kids,” said Folmar.

Call it Christmas in May.

But there is still a need.

David, using his first name only, told us his disability check was two weeks late.

“For food. I got no food,” said David.

If the pandemic has put you in a pinch remember pawning something is not a long term solution.

It’s not cheap.

Small loans can cost 20 to 25 percent a month.

A second round of stimulus payments is likely to keep the trend going into the summer, depending on how large the payments turn out to be.

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