Pawnshops a refuge for desperate jobless

Brokers report a significant increase in business as people put up items for quick cash.

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By Emanuel Cavallaro, Staff Writer 2:20 PM Sunday, May 24, 2009

SPRINGFIELD — These days, plenty of people are in need of quick cash.

With local employers Pentaflex and Benjamin Steel laying off workers, and Fuel Systems LLC and Springfield Ford shutting their doors for good, area pawnbrokers are seeing a different demographic: men and women who used to have good jobs.

Tim Wells, manager of Springfield Pawn and Loan for the last six years, said his shop is doing brisk business, though he is doing more buying than pawning than in past years.

“You’re seeing people you wouldn’t normally see in a pawnshop turning their belongings into money,” he said. “You got people who were five years away from retirement, who now don’t even have a paycheck. It’s tough times. ”

Dave Adelman, president of the National Pawnbroker’s Association, said there is a segment of the population that has always relied on borrowing against their possessions.

It’s what the industry calls “the unbanked,” the estimated 28 percent of U.S. adults who cannot draw from savings or checking accounts in order to meet unexpected expenses.

But he said pawnshops also tend to do well in bad economies.

And the local and national economies are decidedly that.

“The advantage of using a pawnshop is that ... (the borrower) is not required (to pay back the loan),” Adelman pointed out.

Someone who pawns his TV to get money for a water bill, must pay off the loan, plus interest and storage fees, only if he wants his TV back. Otherwise, he can just forfeit his TV.

“What that means is his credit score is not affected, and he doesn’t have bill collectors calling him.”

Serving a new clientele

One in four Americans was out of work when Larry Beloff’s father opened his general store in 1933 at the height of the Great Depression.

When Beloff bought the business from his father in 1979, it was no longer a general store; it had been operating as a pawnshop since the 1950s — Max’s Jewelers & Loan Company Inc. at 300 N. Fountain Ave.

Beloff is one of 220 or so pawnbrokers in the state offering small, short-term collateral loans to people who are in-between paydays and in need of fast cash. He said he sees the same people over and over again.

“By and large, we service a segment of the population that does not have enough money to have savings or checking accounts,” Beloff said.

“But we’re living in difficult times. Now we have a lot of people coming in that I’ve never seen before. And they say, ‘How does this work?’ ”

In the last 18 months, there has been a significant industrywide increase in business, according to Lou Tansky, president of the Ohio Pawnbroker’s Association.

Tansky said that sales are down, but not as dramatically as they are for most retailers. Consumers are looking for bargains and pawnbrokers’ prices are low.

At the same time, a new sort of clientele is pawning and selling items to make ends meet.

About 5.7 million people in America have lost their jobs since the recession began in December 2007, and the unemployment rate in Clark County is a staggering 10.4 percent.

Pawnbrokers are hearing stories of jobs being outsourced, companies shutting down, two-income households suddenly becoming one-income households.

“(It’s) more of a suburban crowd,” Tansky said. “People that were more affluent at one time and have now been laid off.”

Tansky’s own pawnshop, Uncle Ben’s Pawnshop in Cleveland, specializes in antiques and collectibles. He has noticed that customers in need of cash are now pawning items that they normally wouldn’t have considered pawning.

“We’re seeing many more family heirlooms,” he said. “Grandma’s silverware, family jewelry.”

The good news is that the redemption rate in Ohio hasn’t fallen below 80 percent, meaning that only about 20 percent of customers are choosing to forfeit their possessions in lieu of paying off their loans.

“People still just need to use our services for short-term,” Tansky observed.

“Just until they can find some other source of income, whether it’s an unemployment check or severance pay.”

Contact this reporter at (937) 328-0367 or ecavallaro@coxohio.com.

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