Pawn Shop Prosperity

At the Cash America pawn shop in Arlington, Texas, you could outfit, repair and protect your house with all that's on the shelves — the cast-offs of other people's lives.

With the economy near recession, pawn shops are overflowing. People are using their valuables as collateral for loans, most hoping that in a month or two they'll have enough money to pay back the loans plus interest. Otherwise, their valuables belong to the pawnbroker.

Sandra O'Neil wants to buy back her grandma's ring one day.

"My grandmother would haunt me from her grave if I didn't come get this," she said.

Cash America's CEO Daniel Feehan is reluctant to admit it, but hard times are good times for the pawn industry.

"During the early stages of a downturn in the economy we're gonna get a temporary boost as people use our lending services to try to adjust to the changing financial services they find themselves in. And they'll use our retail services to find bargain purchases on merchandise that stretches their dollar a lot further than it would otherwise go," he said.

Craig West said he comes in now a couple of times a week. Now he's selling tools for $15. He's sad to leave them behind, but said, "you do what you gotta do."

The extra cash will end up in his gas tank.

"It's tough, it's real tough," he said.

Doing Well in Good Times and Bad

Customers are selling either because they have things they no longer need, or because they need something else more. Herbert Bailey got $90 for an old gold chain he's not planning to redeem. Essentially, he's trading gold for gas.

"Gas is $3.50 a gallon in some places, $3.25, $3.00, a little extra money helps me out right now so I'm happy with that," he said.

That's a typical refrain here: the high cost of gas and food has led customers to empty their drawers and storage sheds.

"We do pretty well in good times as well as bad times," Feehan said. "We have a very steady customer base. We deal with a segment of the population that is typically referred to as unbanked or underbanked. That represents about a third of the working-age Americans in this country."

And Cash America is in position to reach them. With 500 pawn shops in 22 states, more than 300 payday advance outlets around the country, and online it's one of the leaders in the industry.

"My dad was a union printer. My mom managed an insurance agency when I was growing up in the '50s and '60s. I remember watching them struggle to make ends meet month to month and try to stick away enough extra cash to help pay for college for their three sons and things," Feehan said. "And that's the kind of person that's still out there today and still has the same struggles trying to get from payday to payday."

About 75 percent of their customers will later reclaim their valuables. What you see for sale represents the 25 percent who can't or don't.

A Bittersweet Experience

"People use us typically for short-term emergency needs or unexpected bills that they have and they're glad we're here to help," Feehan said. "If they've got a unexpected medical bill, extra high utility bill in a particular month, or their car, their transmission's out, they need some help just to get from there to the next payday."

If that's true, Linda Crook and her son Jeremy are the exception. They came in to sell stereo headphones now that she's lost her job. She's trying to keep their home.

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