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Apr 28, 2009 3:08 pm US/Central
Pawn Shop Owners, Customers Fear Lending Bill
RIVER OAKS (CBS 11 / TXA 21) ―
Several congressional bills aimed at cutting exorbitant interest rates on loans could end up closing pawnshops in the Metroplex and across the nation.
Pawnshop owners say besides putting them out of business, the proposals would force thousands of people to find another place to go for quick cash.
Sarah Mata and her friends signed the petition against legislation they believe will shut down pawn shops because they depend on them.
"Sometimes we gotta get rid of stuff fast," Mata said, "because we need cash money fast, because we have to buy stuff -- diapers, wipes, whatever."
People buy and sell their stuff at pawn shops, but they also take out loans there.
And it's the loan part --which makes up the majority of a pawnshop's monthly income-- that's caught in two senate bills to cap interest rates on loans at 36 percent per year.
For pawnshop loans, that's only 3 percent per month.
Matthew Smith, who owns a River Oaks pawn shop, says the math just doesn't work for him. "Making three dollars on a hundred doesn't even cover the paperwork involved, the man hours involved," he said. "If it were to pass, it would essentially put every pawn shop out of business. "
Smith and other pawnshop owners say bills meant to crack down on predatory lending would end up cutting businesses and consumers instead.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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