Why Pay Day Loan Stores are Modern Day Pawn Shops

Pawn broking is one of the oldest professions in the world, historically associated with usurious practices. Pawn shops were often used by criminals to fence their stolen goods. All classes of people made use of them at one time by pawning something in exchange for cash, and then paying a higher amount to reclaim it. If the item went unclaimed by the owner the pawn shop could then sell it on for a higher price.

Pawn shops flourished in the back streets of Britain where in the last century they were often used as a means of tiding the family over until the next weekly pay day. It was a common practice to pawn a man’s overcoat during the week and retrieve it before it was needed at the weekend. For many it was a way of life to use the pawn shop, with a slight stigma attached. Family servants would be sent to retrieve items pawned by the wealthier.

The business of pawn broking naturally found a home in America too, as for many people it was the first line of credit available. Over the years it was replaced by banking as a more popular and respectable source of funds. However in times of recession the pawn industry once again regains popularity, but now it has a competitor which is advertising itself at the expense of pawn broking, playing up the negatives of the latter.

The pay day loan business is a thriving one, but as it has become more regulated it feels more threatened, especially as stores in some states are now illegal. The pay day loan business has taken advantage of the internet to ply its trade and is doing so at the expense of the traditional pawn shop. Some of its advertising compares the services of pawn shops in a negative manner, hoping to attract customers towards pay day loans instead of collateral based loans.

Pawn shops today need to check goods received against a stolen goods data base, because of their previous association with handling stolen goods. The pay day loan industry is using this in its advertising by stressing that with their loans you don’t need to prove you aren’t a thief.  The most fantastic selling points are being used to persuade customers of the advantages of online pay day loans over pawn shops:  you don’t need to get dressed to go to a store, as you would with a pawn store. There is no risk of losing your pawn ticket. You don’t need to let granny’s treasured heirloom out of your sight. Imagine a creditable financial institution using those lines to attract business.

It is possible that the pawn shop may make a resurgence in recessionary times and prove itself to still be a competitor of the pay day loan stores. Much will depend on how much the government imposes regulations on the advance cash pay day loan industry, and if it’s online business will escape new rules. It would be a shame to see the traditional pawn shop gone forever as it has survived for so many centuries.