Home Research funding “Opposite Busy:” Diminishing business among pawn shops, payday lenders during pandemic

“Opposite Busy:” Diminishing business among pawn shops, payday lenders during pandemic

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CALGARY – John Sanford has been a pawnbroker for 20 years and says he’s never seen anything like it.

Pawn shops and payday lenders have long been harbingers of tough economic times due to health and financial crises.

But Sanford says that was not the case in the upside down world of 2020 where the COVID-19 pandemic led to a recession.

“I rushed to the bank before it happened and prepared all kinds of cash. I thought it was going to be a godsend. But no. Absolutely not, ”says Sanford, co-owner of Rocky Mountain Pawn in Calgary, as he examines the dwindling number of items on its shelves.

“It was amazing how much stuff we got after 2015 when the oil got into the tank. We had a lot of stuff. And now we have nothing.

Pawn shops lend people money and usually give them 30 days to come back, pay off the loan, and get their items back. Sanford says about eight in ten customers typically return.

Sanford sees an average of 15 to 30 pawns a day, but one day last week he had only had one by mid-afternoon.

“According to people we have spoken to and who have come, the economy is inundated with free money. There are people who brag about what they get from CERB, ”he says.

The federal government’s Canada Emergency Benefit provides people unemployed due to the pandemic $ 500 per week for up to 16 weeks.

On the bright side, in the Sanford era, items that had been in stock for years were sold. Gold rings, chains, Rolex watches, televisions, video game consoles and stereos flew off shelves as the health crisis began. Guitars were also popular.

But with the supplies gone and no one pledging any items, Sanford predicts a calculation will come soon.

“As for the pawns, this will be the worst month since 1982 to lend money. In thirty days, we won’t even earn enough money to pay our rent.

The Halifax Buy and Sell co-owner says business has been slow as well.

“It’s really strange,” says Robert Blotnicky. “Literally everyone who comes through the store is looking to spend their CERB check money and trying to buy things to meet their needs.”

People have also rushed to pay to recover their pledged items, he said. “At this point our pawn shelves are very bare.”

The payday loan industry is also struggling, says Alan Evetts, director of the Canadian Consumer Finance Association and owner of MyCanadaPayday.com in Vancouver.

In the first six weeks of the pandemic, numbers across the industry were consistently down about 84% from before the crisis, he says.

“Things have changed dramatically. Demand has been completely decimated by COVID, ”he says.

“I think there are a few factors that motivate him. The expenses go down dramatically while people are at home. And life is cheaper when you don’t leave your house.

Evetts also blames the high unemployment rate for the drop, as loans depend on clients having an upcoming salary to pay them back.

This report by The Canadian Press was first published on June 2, 2020

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