Pawnshop Business Improves as Patrons’ Problems Worsen

As Robert Wademan tells the story, the customer in his Ventura pawnshop was so desperate for money that he yanked two molars from his mouth with a pair of pliers for the $20 the gold fillings would bring.

“I couldn’t believe anyone could be that down on their luck,” Wademan said. “I told him I couldn’t give him a loan on his teeth, so he asked me to pull out the enamel and just weigh the fillings.”

Most patrons of Wademan’s two pawnshops are not driven to such acts of desperation, but in recent months, they have shown up in increasing numbers, the casualties of a troubled economy.

“You always have welfare people who live from check to check coming in, but what’s hitting us now are the middle-class people who need to make car payments or house payments,” said Wademan, owner of Saul’s Loan & Jewelry in Oxnard and Bill’s Jewelry and Loans in Ventura.

“Everybody always says they’ll come back and get their stuff,” he added. “But right now, our forfeitures are running real high.”

Ventura County’s seven pawnshops have increasingly become lenders of last resort for county residents unable to qualify for bank loans and credit cards during the recession.

Guns, jewelry, cameras, stereo equipment and musical instruments are the usual stock in trade, but several shops have been taking in a wider assortment of goods--fishing reels, jukeboxes, power tools, or anything with resale value.

At Ventura County Cash Loan in Oxnard, a 1966 Jaguar awaits its owner’s return. Manager Arlene J. Truesdale said the company’s jewelry, vintage and late-model car loans have jumped nearly 200% in the last six months compared with the same period a year ago.

“The people who need to come to us, for whatever reason, have been unable to get monies from the normal channels,” Truesdale said. “Either they’re overextended on their credit cards, never had credit in the first place, or have no consistency in their employment.”

Pawnshops operate both as dealers in used merchandise and as lenders to people who put up belongings as collateral.

On outright purchases, most pawnbrokers say they pay 50% of the estimated retail value of the used goods. For loans, the shops lend about 33% of the estimated value of the pawned item, at state-governed, annualized interest rates of 120% on a $10 loan to 21.58% on loans of $2,400 or more.

Customers who hock belongings have about five months to retrieve them by paying off the loan and interest or retain claim to them for longer periods by paying the interest due. If they meet neither requirement, the goods are forfeited to the shop and put up for sale.

Wademan said the number of customers who have not returned to buy back their belongings has tripled since January. Likewise, about 20% of the customers of Get-Mor Loan and Jewelry in Oxnard have been rolling over their five-month loans, up from 15% last year, owner Steve Funk said.

Robert McLennan, 34, forked over a $110 interest payment Tuesday to Simi Pawn Shop on East Los Angeles Avenue to maintain claim to a collection of items that he hocked last fall when business slipped at his auto detailing company.

“Things got bad around Christmas and at the start of the war, so I did what I could to try to stay in business,” said McLennan, who pawned a buffer, a paint gun, a carpet cleaner, an adding machine and several pieces of jewelry. Though business has rebounded slightly, he said, “I can’t afford to get the stuff out yet.”

Lu Palazzola, owner of Simi Jewelers and Pawnbrokers, said she has not noticed a substantial increase in traffic during the last year, except in construction tools.

Scores of construction workers pawned their tool collections early last fall, which Palazzola took as an indication that the building industry was weakening. Tool sales have risen sharply in recent months, which she said is a sign that the industry is rebounding.

Most pawnbrokers are used to criticism that they reap profit from misfortune. They, however, see themselves as financial providers for a class of people disdained by traditional lending institutions.

“Say your rent is due next week and you’re $100 short, can you go to the bank . . . with your television as collateral and get a $100 loan? No way,” Wademan said. “If it wasn’t for pawnshops, a lot of these people would have nowhere to turn.”

“When customers come to pay off their loans and pick up their merchandise, you see how glad they are,” Palazzola said. “The hardest times are behind them.”