Pawn industry remained profitable during recession

by When individuals need fast cash and have valuable belongings, they often consider pawn shops as a valid form of short term lending. Depending on the quality of the good, a borrower can receive a large cash loan by putting up collateral. These types of loans are usually beneficial for both the consumer and the lender, as they do not require a positive credit history, are often paid off quickly and the product is given back to its owner after repayment.
 A recent market study found the pawn industry was one of the few sectors that soared during the recession. Because a large number of consumers experienced tough financial times, the field saw growth from 2008 on. Analysis of the pawn industry during the recession Marketdata Enterprises recently published findings from the U.S. Pawn Shops: An Industry Analysis report. In 2011, the study revealed, there were more than 11,000 American pawn shops in operation and the market for the service reached $14.5 billion. The industry saw positive growth during the recession, as the average loan doled out increased. The report explained the average loan from a pawnbroker was $80 in 2009 and increased to $100 in 2009. However, the source noted, many shops saw a dip in retail sales during this time, though the amount of loans increased, providing revenue. Most shops see profits of between $400,000 and $1.5 million annually. "The industry appears to be almost recession-proof, as the ranks of the "unbanked" consumer continue to grow. Pawn shops provide a service that traditional banks cannot - short term loans for small amounts of money," Marketdata's research director, John LaRosa, explained. Implications for the future The Marketdata report found the industry is predicted to keep growing at a steady pace - increasing by 6.3 percent year-over-year and reaching approximately $19.9 billion by 2016. Though the United States is pulling itself out of the poor financial climate that has been present since 2008, the economy is not yet in the clear. The Marketdata report said because of this, many upper class consumers experiencing fiscal struggles have been pawning items recently, which may continue until the economy is stabilized. Additionally, the ever-increasing popularity of reality television shows centered around the industry has prompted many experts to predict the sector will continue to grow. Virginia's Daily Progress reported shows reveal the various aspect of the industry - while Pawn Stars provides a description of the selling process, Hardcore Pawn provides a good example of what a customer can expect to experience when trying to obtain a loan. Pawnbroker Jamie Sacco told the source the programs have exposed a new, younger crowd to the industry.