AARP BULLETIN TODAY - Windows of Success: Why Are Some Businesses Booming in This Economy?
via AARP Bulletin Today
By: Caroline E. Mayer | Source: From the AARP Bulletin print edition | May 1, 2009
Pawnshops used to be the bank of last resort, says Jordan Tabach-Bank, head of the Beverly Loan Co. “Nowadays, we’re the bank of only resort. People come to us because—where else are they going to get money? They can’t find credit at the bank like they used to.” Tabach-Bank says it’s not unusual for people to seek cash to cover health costs and mortgages. What’s new is that some customers are pawning items to fund their businesses or meet payroll expenses.
Pawnshops have long been a favorite for collateral loans. Customers pledge property—such as jewelry or electronics—as collateral, and pawnbrokers lend money, usually for a 30-day period, although that can be extended. When the loan is repaid, the property is returned to the borrower. There’s no credit check, little paperwork and the transaction can be completed in minutes. Generally, 80 percent of all pawn loans are repaid and the items returned. The rest are foreclosed and sold on the pawnshop floor—though some shops across the country are reporting problems because fewer people have the money to buy.
Nationally, the average pawnshop loan is $75, though Tabach-Bank’s company makes considerably larger loans. That’s probably because it’s located just a block from Rodeo Drive in Beverly Hills, a posh neighborhood that caters to the well-heeled. Yet even in the heart of luxury, Tabach-Bank observes, times are tough: “We’ve never before made so many large loans to white-collar customers—doctors, lawyers, accountants, hedge fund managers, businessmen and -women and other professionals.”
“This is an edited excerpt of Windows of Success: Why Are Some Businesses Booming in This Economy? by Caroline E. Mayer.
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