Pawnbrokers and payday lenders shocked at how the COVID-19 pandemic is affecting them

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

Pawnbrokers and payday lenders have long been the harbingers of a difficult economic period due to the health and financial crises.

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

“I rushed to the bank before that happened and I prepared all kinds of money. I thought it was going to be a boon. But no. Absolutely not, “said Sanford, co-owner of Rocky Mountain Pawn in Calgary. look at the decreasing number of items on its shelves.

“It was amazing how many things we had after 2015 when the oil went to the tank. We had many things. And now we have nothing. “

Pawnbrokers lend money to people and generally give them 30 days to return, repay the loan, and collect their items. Sanford says about eight in 10 customers usually return.

Sanford sees an average of 15 to 30 pawns a day, but one day last week there was only one in the middle of the afternoon.

“According to the people we talked to and who came, the economy is full of free money. There are people who boast about how much they get from CERB, ”he says.

Bare shelves

The Canadian Federal Emergency Allowance provides people unemployed due to the pandemic $ 500 per week for up to 16 weeks.

On the bright side, in Sanford, items that had been stored for years were sold. Gold rings, chains, Rolex watches, televisions, video game consoles and stereos stole from the shelves at the start of the health crisis. Guitars are also popular.

But with supplies disappearing and no one pledging items, Sanford predicts that a calculation will arrive soon.

“As far as pawns are concerned, it will be the worst month since 1982 to lend money. In thirty days, we will not even earn enough money to pay our rent. “

The co-owner of Halifax Buy and Sell says business has also been slow.

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

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

Payday loans

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, industry figures have steadily dropped by around 84% from the crisis, he said.

“Things have changed radically. The demand has been completely wiped out by COVID, ”he says.

“I think there are a few factors that motivate her. Expenses are greatly reduced while people are at home. And life is cheaper when you don’t leave your house. “

Evetts also blames high unemployment for dropping out, as loans depend on customers with future wages to pay them back.

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