Pawn loans and pawning is becoming far more high profile thanks to TV shows like "Pawn Stars." This photo of the "Pawn Stars" storefront is from Wikimedia Commons.

Television shows that feature various people who run pawn shops, offer pawn loans or buy and sell items for profit have popped up in the past couple of years. Now, wealthier customers are starting to frequent pawn businesses. The trade has suddenly gained respectability that it has not always had.

Reality television makes stars of people with a profession

A reality television show called “Pawn Stars” hit the air in summer 2009. The show, which debuted on the History channel but has since entered syndication, chronicles the goings-on at the Gold and Silver Pawn Shop in Las Vegas, Nev., according to Fox News. The main focus is the interactions between customers looking to sell items and owner/operator Rick Harrison or his father who co-owns the store. The TLC network recently debuted “Pawn Queens,” according to Reuters, about two women named Nikki and Minda who operate the Naperville Jewelry and Loan pawn shop outside of Chicago, Ill. Their store caters more toward women rather than being an all-purpose pawn store. The additional exposure has shed a little light on a somewhat mysterious profession.

New faces on old profession

Pawnbroking, according to Wikipedia, has been around for nearly 3,000 years old. Kings Henry V and Edward III of England paid for wars by pawning the Crown Jewels. Basically, a person takes a piece of property to a pawnbroker in exchange for a small personal loan. If borrowers don’t pay off the loans in time, the property is forfeited to the pawn lender. Pawn shops used to be used almost exclusively by middle and lower income people, but the wealthy have started frequenting pawn stores in recent years. Pawning has even gone online; Pawngo, according to SmartMoney, will wire someone a loan once they receive the pawned property via FedEx. Pawngo has issued loans against items like diamond rings, Cartier watches and even a genuine Picasso. Pawnbrokers have also done well in the recession, as large pawn and payday loan store chains such as EZCorp and Cash America have been reporting consistent profits throughout the past few years, according to the Salt Lake Tribune.

Gold rush has been a blessing

Over the past year or so, there has been an extensive amount of buzz about investing in gold and silver. In order for someone to cash in on those commodities, someone has to buy it, and pawn shops are doing a lot of the buying, according to MSNBC. Gold and silver have been hot commodities for some time, and pawnbrokers and precious metal recyclers are happy trade customers some cold hard cash. Some experts think it won’t last, though. For instance, economist Veronique de Rugy has observed that gold prices aren’t that high, once adjusted for inflation, and tend to fluctuate more wildly than just about any other commodity, according to Reason.com.

Sources

Fox News

Reuters

Wikipedia

Salt Lake Tribune

Smart Money

MSNBC

Reason

Advance America is forced to desert 122 stores after Arizona banned their trade from the state. Image from Wikimedia Commons

After the Arizona ban on payday lending went into effect, and new legislation is being passed in Colorado, Advance America announced it was closing more than 100 store locations nationwide.  One of the nation’s largest payday lenders, and one of the few that grew large enough to be publicly traded, is shutting down 122 stores in Arizona, Washington and Colorado.  The stock price for Advance America then quickly tumbled on the New York Stock Exchange or NYSE, dipped 5 percent. Advance America has been in a stock lull so far this year

Advance America to shutter 122 stores

Advance America announced it would close 122 stores. The affected states are Washington, Arizona and Colorado. The state of Arizona recently let a law lapse that allowed payday lenders to operate in the state. The law was not renewed, and payday lending is now illegal in Arizona which has forced numerous payday loan stores to close their doors. Advance America will be closing 47 stores in Arizona and 75 other locations in Colorado and Washington state. The company will incur up to $5 million in closing costs in doing so.

Stock price dips

Advance America announced the store closures on July 9, after an all time low for the year. The share price for the firm was down to $3.55 on the NYSE. As of July 22, the stock price had climbed back up to $3.66. Publicly traded payday lending companies are thought to be at great risk with the creation of the Bureau of Consumer Financial Protection, as some believe the newly created agency will regulate cash advance lenders out of business. Since the average payday loan store employs at least 3 people, 366 people are now going to be out of work due to these closures.

State governments starting to slip the noose

Payday lending has been under fire for more than a decade. While no one relishes the idea of high cost lending, payday lenders entered into a market that the banks had left. One wonders what options will be left if the finance market that is not Wall Street is driven out of existence.

Further Reading

Advance America closures

NYSE

Looking for a cash advance, prepaid Visa, gift card, money order or wire transfer? Chances are that your search may have led you across some of the 7,000-plus employees of www.AdvanceAmerica.net (aka AARC, Inc. or AEA on the New York Stock Exchange). The cash advance and payday loan company founded in 1997 and currently headquartered in Spartanburg, South
Carolina operates over 2,800 walk-in cash advance stores across 35 United States, as well as locations in Canada and the United Kingdom. That doesn’t even take into account affiliate stations under the National Cash Advance brand. Most recent annual revenue statements put Advance America at nearly $710 million in profit, which indicates that many of you have utilized their services online or in-store.

Heed the Company Creed

Respect Your Customers: We treat our customers with dignity and courtesy at all times.

Respect Your Associates: We treat our associates as we would like to be treated.

Respect Yourself: We work hard and use good, ethical judgment in everything we do.

Respect the Law: The Law is there to protect us and our customers.

Reports of Cash Advance Satisfaction

“Advance America Cash Advance provides simple and reliable access to funds that help working people meet their financial obligations,” claims the company’s Web site, AdvanceAmerica.net. “Our customers choose a cash advance as a dignified, transparent and responsible option for managing short-term financial challenges, without asking family or friends for money or risking personal items as collateral.” What consumer who was in a financial jam wouldn’t want such an option? And if Advance America’s survey claim is accurate, as high as 92 percent of their customers say cash advance is “a useful service” and 90 percent were “very satisfied” with their Advance America transaction.

Who Looks to Advance America?

The company provides interesting customer demographic information on their Web site. Median household income is $40,984, while average customer age is 39. Nine out of 10 customers have at least a high school diploma, and more than half have college credits on their resume. Almost half of all Advance America customers own their own homes as well. So what we see is the portrait of a customer who isn’t poor, uneducated or without assets. Furthermore, all customers of Advance America have a steady income and active checking account; these are basic requirements to apply at nearly any cash advance lender, including those who lend through this Personal Money Market online portal.

Why a Cash Advance?

We know that the recession has brought tough times to America and the world. Short-term consumer credit like cash advances or payday loans can help during a cash emergency –  and they’re available through Advance America even if a consumer’s credit or administrative hassle have barred them from traditional bank or credit union loans. Increased consumer financial choice is better in a working capitalist model for a variety of reasons, including price regulation. More than 19 million cash advance customers agree, says Advance America. And if that doesn’t convince you, consider just how much you might be pay with comparable alternatives (image courtesy of Advance America).

Advance America: A Force in Online Cash Advance

Using data from Compete.com, we can see that Advance America received 147,048 unique visitors in November 2009 (up about five percent from the previous month). Total visitors in November amounted to 243,070, which reflected about a 29 percent increase over October totals. Not surprisingly, Google referred the most traffic to advanceamerica.net (17 percent), while Yahoo (seven percent) and “apply.advanceamerica.net” (also seven percent) were also significant. Most common search terms according to Compete.com are “Advance America” (24 percent), “cash advance” (eight percent), “advanceamerica.net” (five percent), “payday loans” (four percent) and “cash advance America” (four percent).

What You Need to Apply

If cash advances and payday loans from Advance America appeal to you, here is a general summation of what you’ll need to apply:

• A post-dated check for the loan amount plus fees (typically around $15 per $100 loaned)
• Government-issued photo ID
• Second ID with your name printed on it (Social Security card is one example)
• A bank statement one month old or newer
• Recent pay stub for income verification
• Personal references (at least three)

Please note that requirements may vary by state and when you apply for a cash advance online. If you apply online for an Advance America cash advance of $100 or more and receive approval, the money can be directly deposited into your active checking account by the following day (if the application is submitted before 9 p.m. CST).

Advance America – Because That’s What You Do

Because you work hard, you deserve a cash advance company that meets your needs. That’s what Advance America claims to do. Because working people “advance America,” they deserve courtesy and respect – something traditional banking giants aren’t always willing to give.