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OP-ED: Lawmakers urged to resist push to classify pawnbrokers as predatory lenders

By KELLY SWISHER
President, Illinois Pawnbrokers Association

Kelly Swisher, President, Illinois Pawnbrokers Association

By this point, the words were just crushing: “I’m sorry. We just can’t help you.”

Rona and Tyson are a newly married couple, with a toddler and another baby on the way. Neither have college degrees. They had each made some bad decisions earlier in life before they met and now are trying to pick up the pieces together. They moved here hoping for a fresh start.

Mortgage lenders, bank officers, credit unions – one by one, their dreams were squashed. “I’m sorry. We just can’t help you.” And if some state legislators and advocates had their way in January, their final stop for help at the neighborhood pawn shop could have been the most devastating. Instead, they heard, “Yes, how can we help you?”

Across Illinois, hundreds of our customers end up like the examples of Rona and Tyson here, and they face these challenges every day. They have no credit or terrible credit, so they can’t get the funds they need to lift themselves up. They can’t prove they can overcome their past bad decisions without some help, and their friends and family are tapped out. Where do they turn?

Fortunately for them and many others, pawnbrokers provide an answer. They pawn some of their items – some wanted, some no longer useful – for the cash they need to deal with that medical emergency or other urgent expense. Once payday comes, they go back to the store and buy back their items at a reasonable cost. No vicious debt cycles, no shaming, no hassles. Just opportunity.

This all could change over the next two weeks if legislators are successful at adding pawnbrokers to the state’s new Predatory Loan Prevention Act. We call on them to oppose such a devastating decision.

Advocates have so far had success painting the pawn industry with an ugly brush, with wild accusations of abusive loan practices and exorbitant profits. But as pawn customers, we know better, and we need to set the record straight before bad policy takes away our lifeline.

Pawns are not loans. Pawns are straightforward transactions. I go in and offer something of value – a camera, computer, jewelry – and the store owner offers me cash for the items. For every $100 I receive from the pawn, I know I will pay $20 a month to get the item back. Later, I’m able to bring it back again if I need cash. Thousands of times a year, within 30 or 60 days customers are back to retrieve the items they pawned, grateful they had help when they needed it and comforted that the store will be there the next time they’re in need.

The costs and terms are clear. We know the scare tactics behind “240 percent” interest rates don’t add up. When banks offer you a 6 percent 30-year loan on a $100,000 mortgage, do you accuse them of extortion when you realize it will cost you more than $215,000 to pay it off?

Springfield Mayor Jim Langfelder was exactly right when he joined advocates recently, in touting this law. “We’re all in this together. …It’s important that we open that dialogue: what is right in the rights of the consumers, and small businesses.” No advocate will try to tell you there’s a lending option for everyone who needs it. Pawns help meet a gap in the marketplace, and for people who need them, we cannot afford to lose our lifeline.

The PLPA rightly has gone after lenders who see only dollar signs in customers with no other options. Pawns are different. There are no credit checks or debt spirals. You get money out of what you own until you can get it back. Period.

The Woodstock Institute driving this legislation has this as its mission statement: “We’re working to create an economy where everyone has access to the financial services and resources they need to prosper.” When you close down our pawn shops and we have nowhere else to go, how will you help us prosper? Please, legislators, keep pawn shops out of the PLPA.

Kelly Swisher is president of the Illinois Pawnbrokers Association and owner of Arlington Jewelry and Pawn in Arlington Heights.

 

 

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