A recent controversial action of the Crystal Lake City Counsel appears to bar pawn shops from its prime commercial/business district when they voted 6-0 to reject a business owner’s request to locate a pawn shop on Route 14. This action was troubling to me and apparently a number of people based on the on-line comments in the NW Herald after the infamous vote.
Over the years pawn shops have developed a bad image. Dingy looking stores charging usurious rates fencing stolen goods is an image that many people conjure up when they think of pawn shops. The image cannot be farther from the truth.
Recent regulations of pawnbrokers by many states have taken pawn shops out of the back alleys into the higher rent districts. States have acted to limit the interest rates charged by pawnbrokers for items hocked and forced pawn shops to work with local police to identify pawned items that may have been stolen. In many states every pawn shop in the state is required by law to submit a report to the local police on every pawned item including the serial numbers of the items and the full identity of the customer. Pawnbrokers have a high interest in taking in as little stolen property as possible since the police can confiscate such merchandise and the pawnbroker has to take the loss.
Pawning has long been a source of capital for people in need as well as a means of financing business ventures. A typical transaction consists of a potential borrower taking an item of value into the shop. The pawnbroker determines how much to loan the patron for the item. Loans are paid out at a rate of about one-third to one half of the price the broker can expect to receive from the sale of that item for a third party during the worst of times. This business model assures a profit will be made. With so many people having bad or no credit, pawn shops represent one of the only places they can turn to if they need immediate cash. It’s a fact, however that four out of every five customers successfully pay off their loan and retrieve the item they hocked.
The National Association of Pawnbrokers reports that there are over 30 million pawn store customers per year and they appreciate this unique form of credit and tend to borrow only what they need (Pawn Industry News-“ Pawn Shops: Economic Barometer?” April, 2009). Pawnbrokers never require a credit check and never negatively affect a customer’s credit. Each day, pawnbrokers help families through challenging economic times by providing non-recourse, small dollar, short term loans when they have nowhere else to turn (National Pawnbrokers Association – Industry Overview).
There are between 12,000 and 14,000 pawn shops in the US today according to the National Pawnbrokers Association in Washington D.C. America in Madison , WI are as large as 35,000 square feet, taking over a vacant Circuit City
So why has Crystal Lake decided that pawn shops are not suited for their community whose slogan has long been “A Good Place to Live?” If you do the research, pawn shops are a legitimate business regulated by the State providing a needed service to a percentage of the population who has a need for these services. These businesses also pay rent to landlords and create jobs. There are stores that provide pawn service in Island Lake , Algonquin, East Dundee, McHenry, Mundelein and Fox River Grove. A lack of information and basic fear due to a distorted image of reality are the primary reasons why Crystal Lake City Council has erred in their decision . I hope they reconsider.
