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Pawn Shops Get Busy as People Sell Their Stuff to Pay for Gas, Groceries

Neil lives in Canada and writes about society and politics.
Published: July 6, 2022
Demand for loans from pawn brokers has skyrocketed amid the middle class's financial crisis.
Desperate times call for desperate measures. People are resorting to pawning their valuables to pay for gas and groceries, reports from the UK and United States reveal. (Image: Nicola Barts via Pexels)

Pawn shops and pawn brokers in the United States and the United Kingdom are reporting record increases in demand for pawn loans as the middle class struggles to pay for gasoline and groceries.

The largest pawnbroker in the United Kingdom says its balance sheet has increased 75 percent year over year.

H&T Group revealed the statistic in a July 4 article published by Bloomberg, stating that their “pledge book” had grown to 84.2 million pounds.

The article explained that pledge lending is when a taker secures a personal loan with valuables, such as jewelry.

A same day article by The Guardian added, “Borrowing from H&T has exceeded the pre-pandemic high with no relaxation of lending criteria.”

MORE ON THE MIDDLE CLASS FINANCIAL CRISIS

The article added that H&T’s pledge book had ballooned more than 20 million pounds since December alone.

The Guardian quoted the firm’s CEO, Chris Gillespie, as stating that he is “delighted with the progress we have made in the first half of 2022,” in addition to “the momentum with which we enter the second half of the year.”

In a related instance, on June 22, The Express reported that a new trend had emerged among citizens receiving marginal 150 pound government subsidies.

Because the stimmies were disbursed via check instead of electronic transfer, they take four or five days to clear at the bank. As a result, people who couldn’t wait were taking their helicopter funds to the pawnbroker and paying the 15 percent fee to get cash instantly.

The situation does not appear to be isolated to the UK.

In a June 15 article published by Dallas broadcaster NBCDFW, the owner of an area pawn shop estimated he’s seen demand increase by 50 percent year over year.

“It is very unprecedented. We have more stuff coming in every day than we’ve ever seen,” P&J Pawn owner Patrick Wade said. 

Wade added that “pulls,” which he described as goods that become inventory after a borrower doesn’t pay, are notably increasing, “which is reducing the cost of merchandise.”

He added that two of the big complaints he’s hearing from customers is their inability to get to work amid inflated fuel prices and the high cost of groceries.

The owner added that even though sales are down, 30 or more people are walking in each day to pawn their stuff.

A similar story was recounted by Greenville’s Fox Carolina in a June 28 article, where the outlet surveyed local pawn shops. 

Dewey Lemons, owner of a local broker, told the station he’s been in business for 40 years and has also seen an unprecedented influx of people pawning their valuables to buy gas.

“Everybody is going broke faster than normal…I was kind of surprised that everybody, all of a sudden, went from buying, buying, buying, to now, they’re selling, and needing money, and buying stuff,” he said.

Lemons explained, however, that the situation was as much of a liability for his business as it is a boon, “It’s good for right now but then, sooner or later, we’ve got to sell all of this stuff that we’re buying.” 

“So, it has got to turn around sometime for us. As long as we can hold onto it, and it turns around, we’re going to be alright,” he clarified.

In a somewhat related story, Iowa radio station KHAK 98.1 reported on June 28 that local big box retailers such as Target and Walmart were considering a policy that would pay buyers to not return items already purchased.

They paraphrased the notion as one that would let buyers “keep your unwanted merchandise and get your money back too.”

At the root of the problem appears to be the situation that sellers simply have too much inventory on hand resulting from a need to adjust order allocation during last year’s supply chain crisis, a factor that ran headlong into demand destruction created by record inflation.