The True Financial Savior of Short-Term Credit

Been interesting watching the news reporting with everyone’s plan on how to fix the current global credit crisis. The pawnbroking industry has been in the spotlight but the real focus lately has been on credit card issuers and payday loan stores. At least this gives the pawnbroking industry the opportunity to take a deep breath and regroup for a minute.

But one story that’s been covered from several angles has had some interesting spins put on it by some credit unions in the US and the US payday lending industry. It seems that several credit unions are now touting a brand-new product for low buck short term loans to help people with low paying jobs or poor credit. And they’re trying to come across as a financial savior.

Yeah, right. Problem is – I’m sure many liberal consumer groups will believe them.

One credit union president was quoted as saying that he’s going to allow these low income poor credit consumers to get off the treadmill. He states that his new short-term small loan product is just the ticket to get these consumers away from the check cashers, payday loan stores, and of course – the pawn shops. Not surprisingly, the payday loan industry does not agree.

The payday loan industry is stating that the credit unions product is nearly identical to the payday loan stores product. In certain cases they are correct. If either one of these industries thought a bit more progressively about what their customer base actually wants in a short-term lending product and what they can actually afford to repay in a reasonable length of time they could come up with a hybrid micro-lending product for consumers that would be far superior to what either one of them are currently offering. Don’t worry – this isn’t going to happen.

Why – because I can guarantee you government will get in the way of such progress.

Funny thing is – government’s been drilling the hell out of just about every short-term high-interest lending product on the market these days, but these are really the only consumer credit lending options available currently to many people around the globe. And what surprises me the most I feel is the fact that nobody is taking on the rent to own industry. At least not yet.

But no matter who they compare in short-term lending products – be it credit cards, payday loan stores, right to own stores, credit unions, or even Uncle Vinnie – no one can compare to the civilized nature of the lending product offered by pawnbrokers. Pawnshops still remain and always will remain the only short-term lenders worldwide who do not create debt for their customers. Pawnbrokers offer the only lending product on the market where the customer has a choice of whether to repay their loans or not. And we are also the only short-term lender who will never ever cause our customer’s credit score to plummet because of unpaid loans.

Whoops – I’m mistaken there. Uncle Vinnie won’t do that either, although he could cause your medical expenses to go up. Not something I would recommend to anyone in need of credit.

Pawnbrokers know how superior a pawn loan is to other forms of short-term credit. So do their customers. But the point here is most people have no idea how much sense pawn loans make in a credit hungry society. Hopefully, by spreading the word, pawn shop owners and customers may just cause the industry to be looked at in a different light.

Because when it gets right down to it the 5000 year history of the pawnbroking industry speaks for itself. Pawnbrokers were practically the only lender out to help the consumer during the Great Depression. The pawnbroking industry is still vibrant and economically relevant in today’s global consumer credit market. While it will never replace the more mainstream forms of consumer credit lending it has proven to be for thousands of years the true financial savior in difficult times.