By on January 25, 2013

100 Cars are lined up for next week’s sale. Every single one of them is a repo from a very successful title pawn company… and every one has a story to tell.

The histories on many repos really begin with the license plates. Disabled Veteran… Educator… it’s amazing how many cars and trucks were once owned by folks who really made a difference in this world.

It doesn’t matter though. After 25 percent monthly interest rates and numerous attempts to get their clients to borrow even more money… their car is now forfeit. And so is their freedom.

The auction will be taking place in Clayton County, Georgia. A community that is an amazing microcosm of black America. The malls are in decline. Jobs are scarce, and big box stores that were once rare to non-existent in the community are now all over the place.

But to get to any of them you need a car. Any vehicle will do. The county has no more public transportation and the tax base continues to be affected by numerous factors.

One of them is the laissez-faire attitude towards companies that prey on the poor and the desperate. A 25 percent monthly interest rate for three months, offered by virtually every title pawn in every corner of this community, can easily compound to a loan that is too difficult to pay for those who are already struggling.

Even if that loan is only based on a 40 percent wholesale Black Book Value for the vehicle (which is typical), a $1000 loan will stay at $1000 only so long as the debtor is able to pay $750 within those first three months.

A loan default usually results in a repossessed car that can be worth many more times the original loan value. Interest payments, repo fees, administrative fees, and the inevitable auction expenses often result in a healthy profit for the title pawn company. They also result in destitution for the borrower. In Georgia you can offer a loan at a rate of over 180 percent a year. 25 percent for each of the first three months and 12.5 percent for every month thereafter… and in perpetuity.

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Most states and communities outright ban title pawns due to the corrosive impact such usurious loan rate can have on the community. Wisconsin is the latest state to regulate the interest rate to a still semi-usurious 5 percent a month. That measure took years and a very tough battle with an army of highly paid title pawn lobbyists.

But other Americans (mostly in the South and Midwest) are not nearly that lucky. In some towns the number of title pawns on the main strip can outnumber the fast food joints and closed down mom-and pop businesses. The temptation is always there. Especially if there is no other financial recourse. The impact this has on our economy is far greater than one can imagine.

Any American without a car is very limited in their ability to find employment, and this reality costs money for everyone.

Taxpayers pay for more unemployment benefits and with fewer Americans able to afford a home, uncollected property taxes go up as well.

Editor’s Note:A summary of taxes receivable in Clayton County, Georgia as of June 30, 2011 is as follows:
Tax Year
2010 $ 4,217,758
2009 1,193,407
2008 373,337
2007 129,005
2006 115,869

The government has to provide more welfare services for these citizens. More debt is inevitably issued by all levels of government to pay for it all.

With more debt come interest payments and even less money over the long-term to cover deficits that are now rising dramatically. But there’s an even more depressing and sinister side to it.

That is growth. Folks who were once successful need to be able to build on those once firm foundations, and without a car, that just isn’t going to happen.

 

The handshake and the face-to-face time most small businesses need to get going simply can’t happen when their car is in a repo lot instead of a driveway. Neither can they easily care for their families. It’s a vicious cycle of keeping people in poverty, and in a place like Clayton County, it represents a new American reality.

The question is obviously… What to do? You can ban title pawns outright. With all the debate about free enterprise, it’s interesting to note that certain businesses that are seen as parasitic can actually do a lot of good. It’s estimated that well over 100,000 vehicles will be repossessed by title pawn companies this year.

But hundreds of thousands of Americans will also be able to pay off those loans. Should they be banned? Regulated? Left to the vagaries of the market?

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Most states have chosen to ban title pawns, or to regulate them to a degree where the interest rate is far lower than the 187.5 percent annual interest rate currently charged in Georgia. In private conversations with title pawn managers, I have been told that many of these firms can usually enjoy gross profit margins that are well in excess of the amount loaned. This may be one of the reasons why a place like Clayton County is filled with title pawns while the overall employment and home ownership rates continue to decline in economically depressed communities.

Then there is the issue of local favoritism. The local title pawn auction I mentioned earlier was illegally operating in Clayton County for nearly eight months. Over a dozen auctions of approximately 700 vehicles took place with no business license, no permanent office or phone at the location, and no voice recording of the three bids required by state law to liquidate the cars. Ironically enough, it took place in the back of a closed down GM dealership that once had employed hundreds of people over the past decade.

Even after they were warned about their activity byan official the prior year, they continued to liquidate cars, the law be damned. Eventually someone informed the county of the activity and the place was shut down.

After over a dozen illegal sales and that second visit by a county official, something truly unexplainable happened.

They got their business license. It’s amazing that any business with such a long history of illegal activity would be so quickly accommodated. The neighboring City of Morrow, which had been the prior home for that auction before it was discovered, threw them out. In fact, the location of the auction had been moved three times once it came to Clayton County.

So how can anyone justify the issuing of a license in light of this? Would an unlicensed driver or struggling business anywhere be given the same treatment?

There are a lot of responsible citizens throughout our communities who try to provide for their families. In their work, and in their dealings, they pursue an opportunity to build a better life. As Americans celebrate Independence Day, the question that must be considered is whether the poor, tired and huddled masses of generations past would have sacrificed it all had they known that our government would so easily whore itself out to the powers that be?

It is a question worth considering…

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135 Comments on “Hammer Time: The Black Pawn...”


  • avatar
    Robert.Walter

    Wow, a portrait of creeping dystopia.

    What is happening to America?

    • 0 avatar
      psarhjinian

      Honestly? Class warfare. Not outright, in-your-face, oiled-with-the-blood-of-the-underclasses/bourgeoisie, but a more subtle form.

      In the west in general and the United States in particular we’ve developed a virulent, unsustainable economy that’s premised on growth of wealth for the wealthy. You can see this in the rise of GDP and average wage, while the median has remained stuck and the spread become frightening. You need a middle class to drive this kind of economy, and it’s the middle class that’s being hollowed out.

      This kind of thing is where it starts: develop urban infrastructures that benefit corporations and city tax coffers (in the short term) rather than people. Use debt and credit as a substitute for earning power. Cut the social safety net for tax breaks that mean nothing to the bulk of the working populace.

      Where it ends, eventually, is indentured servitude or poverty riots. And it’s stupid, because if we stopped chasing the easy, short-term buck, made some painful decisions about paying for services (at all levels of society: personal, corporate and government) and started being progressive, we could probably fix this.

      Unfortunately, people are short-sighted, government plays to that by raw populism and corporations, well, keep doing what they do.

      • 0 avatar

        Bring back Usury Laws. Interest is slavery, which is why it is forbidden in the Muslim religion. If you can’t make a loan at a reasonable rate, then the borrower is not credit worthy.

        The illusion of choice…if you need milk money for the kids, you don’t have a choice. It’s real easy to say you are on your own, but that does not account for reality.

        This, along with 29.9 % penalty interest, compounded daily, is immoral and wrong. Just don’t make the loan. The Bank is supposed to be the adult in the room, not a drug pusher.

    • 0 avatar
      philipwitak

      @ psarhjinian / July 5th, 2010 at 12:39 pm “…Unfortunately, people are short-sighted, government plays to that by raw populism and corporations, well, keep doing what they do…”

      agreed with almost everything you said, right up until the end. “people are short-sighted,” but the more salient reality in all this is that people are corruptible and far too many of them have been, and continue to be, corrupted. and they are playing the rest of us for a bunch of chumps. corrupted capitalism is crapitalism and the vast majority of us are getting sh!t on. repeatedly.

      ‘the people’ can no longer count on government to protect their interests. ‘the people’ need to respond and mount a spirited defense of all they hold dear or it will be – methodically, systematically – taken from them.

      • 0 avatar
        dolorean

        “‘the people’ can no longer count on government to protect their interests. ‘the people’ need to respond and mount a spirited defense of all they hold dear or it will be – methodically, systematically – taken from them.”

        @philipwitak, the time for that has come and gone. We’ve entered a great new era of Serfdom to an illusion of freedom to the alter of Consumerism. The elections of 2010 and 2012 had more money thrown at it from private corporations than the US used to get us to the moon. With an attack on our shores by terrorists, we weren’t told to sacrifice a thing, rather to keep shopping (the American flag as a shopping bag was the symbol de rigeur), keep driving American highways, and fly to Disney World.

        By that time, we were already mired in the illusion of choice. Instead of engaging our government to do as its supposed to, protect its people; we were told to not worry about it and go back to our homes and enjoy interest free ‘Freedom’ loans from GM to buy a new Chevy. The American dream is now encapsulated in conspicuous wealth. We no longer name important buildings and events after great minds or historic actions, but after Corporations so we may have Circuses and Bread and not think about it. Keep spending money, even if you have to pawn your car, a device we’ve convinced you, and we’ve done everything possible to ensure, that you have to have.

        Japanese Anime has played this scenario out as Corporations rule various fiefdoms and wars ignite between them with Government a simple window dressing for the peasantry. Its not the end of the world, but you can see it from here.

      • 0 avatar
        Volts On Fire

        What’s true for companies like GM is also true for the lesser masses of our society. If you can’t survive without government “help” and reallocating money that rightfully belongs to those who earned it in the first place, then you shouldn’t survive, period.

        We’ve gone so far down into the hole of government reliance and control, a new civil war is likely the only way to correct the problem.

      • 0 avatar
        golden2husky

        ……If you can’t survive without government “help” and reallocating money that rightfully belongs to those who earned it in the first place, then you shouldn’t survive, period……

        That would be true if those monies were made legally and rightfully. If you think that what is stated in the story is ok and those opportunistic dirtbags that milk working people is considered “rightfully earned” you have a seriously damaged moral compass. When I read things like this, I see a blueprint for mandating heavy regulation. Those who want government out of business would find far less government involvement if they had a better business model. I feel disgusted as a American, no, a human, to think such purulent behavior is rewarded with the issuing of a license to continue the rape of a community like that. What they should have received is jail time and seizure of every dollar they have. Despite all the bad mouthing of other countries, sometimes the country that shames me the most is my own. And it grieves me to say that…

    • 0 avatar
      Landcrusher

      The responses to this comment, and the following responses to those, are a great example of how bad we can often argue on the Internet.

      These scumbags are practicing virtually the same scam as some ancient Romans, if not earlier jerks. We should fix it, and we should do it seriously. No one thinks its good. Some realize the limits of making laws, and realize that making laws can make things worse.

      One thing I am pretty sure of. If voters and news watchers had wiser priorities, things like this would be less of a problem.

      • 0 avatar
        Volts On Fire

        What you call a “scam,” I call one of the last functioning tenets of Darwinism still left in our overly cushy, entitlement-laden society.

        Title loans demonstrate the harsh reality that everyone has a place in our society… and for many, that place is the gutter, pure and simple. I refuse to sentimentalize human garbage, or demonize those shrewd enough to make a buck off their sheer stupidity.

  • avatar
    1169hp

    I hate to sound like Public Service Announcement (PSA) from the seventies, but knowledge is power!

    These title loan places are not targeting Blacks, they’re targeting the ignorant. And there is no shortage of ignorant/irresponsible people in our country.

    Interesting story, Steven.

    DT

    • 0 avatar
      danio3834

      I agree. A greater emphasis on applied mathematics in our schools would go a long way to helping people understand the terms of the loans they accept. Assuming they can even read the terms and get to the numbers.

      Honestly, I can’t blame the companies any more than I can blame the lendee for signing on the line.

      • 0 avatar
        Dan

        What 18 year-olds leave 12 years and 140,000 dollars of public schooling without is even more of a travesty of what they leave that schooling with.

        But preying on stupid people isn’t any kind of moral mitigation. If anything it’s enhancement. These con shops are signing people into poverty and we all pay for it when they get there.

      • 0 avatar
        28-Cars-Later

        +1

      • 0 avatar
        dolorean

        “A greater emphasis on applied mathematics in our schools would go a long way to helping people understand the terms of the loans they accept. Assuming they can even read the terms and get to the numbers.”

        @danio, we live in a society where the people cringe in horror if you ask them for a .01 cent increas to their property taxes to pay for education, but gleefully vote for lotteries that most directly affect the lower classes to finance education. Without any regulation on how that money is to be spent on education, leaving us to have, again, Corporations step in to help pay the way. There is no impetus to allow for peasants to know too much because we want them, fat, dumb, and happy and out there buying our crap.

        Increased math classes aren’t going to help as the ‘Educator’ license plate attests. Its a societial change to reform ourselves that we are not willing to take up.

      • 0 avatar
        chrishs2000

        @dolorean

        My Economics (301 maybe?) professor in college said it best: Lottery is a tax on the stupid.

  • avatar
    dwford

    I spent a few days in Georgia last week, and these title pawn companies advertise like crazy on TV. Kind of sad, that people would be so desperate to fall for this scam. I suppose you could argue that they are no different than a pawn shop, but again, a terrible way to take a loan.

    It is unfortunate that schools don’t teach basic money management. That would solve a lot of problems.

    • 0 avatar

      I’m not sure this is something the schools could easily teach. It’s not just a matter of knowledge, it’s a way of seeing the world.

      Many people, even those who currently have plenty of money, have a very short-term outlook. They deal with their immediate needs, and assume that they’ll be able to deal with the consequences when they have to.

      • 0 avatar
        danio3834

        When I was in high school, I specifically remember learning about compound interest. Maybe that’s why I rarely use credit today.

      • 0 avatar
        Detroit-Iron

        The problem with the math curriculum, at least back when I was in high school, is that it went lock step algebra > geometry > alg2/trig > pre-calc > calculus. That is fine if you are planning on being a physics major, but the vast majority of kids would have been better served if after algebra or geometry the next step was intro to statistics and probabilities. Of course, that would destroy funding for the schools since no one would buy lottery tickets anymore, so maybe that’s the plan and I just don’t understand.

      • 0 avatar
        28-Cars-Later

        @Detriot

        In my high school it was Algebra -> Algebra2 -> Geometry or Trig -> Precalc. However I was what you might call a ‘special’ math student, Prealegbra -> Prealgebra Part 3 (the search for 2!) -> Geometry. Then as a senior you could opt out of math altogether, or in the ‘special’ track take an elective called Personal Finance. This class covered how to balance a checkbook, keep a budget, and high level overview of loans/mortgages and the stock market. This combined with the Business Law elective that year were the two most useful classes I ever took.

    • 0 avatar
      dwford

      That’s exactly what needs to be taught!! How hard is it to teach kids to balance a checkbook, prioritize finite amounts of money so as to pay bills on time, perhaps explain the costs of children to discourage them from taking on the responsibility when they are not ready. Perhaps teaching kids the value of saving for their wants vs using credit cards and debt so that sudden expenses or loss of a job doesn’t create such hardships. There are plenty of real life examples that could be used to educate children in the proper respect for money, but no one does it. Why??

    • 0 avatar
      NulloModo

      While it wasn’t a set part of the curriculum, I learned some basic money management in school, as should anyone who can pass basic algebra. Compound interest is still a part of the math curriculum I would assume, and it doesn’t take too much extrapolation to take the lessons there and apply them to real life.

    • 0 avatar
      1996MEdition

      Ask these people if they finished school and there is your answer as to why they have no concept of managing finances.

      • 0 avatar
        dolorean

        @1996ME, its not ‘these people’. Its you and me. These CA$H for Gold, Car Title Loan$, and Check Ca$hing NOW ‘businesses’ are rampant in the West and South. People, such as my Soldiers, are drawn to these by the lure of the easy buck convinced that they are making the smart decision. They don’t know any better and even when confronted with the simple math showing them how much money they will be pissing away over the months, they get defensive or dismissive. Like I went after their right to be an adult.

        Second, the baggers at the several check out stands at the Pawn Shoppe above struck me as terrifying in that its so busy that it needs a bagging staff, like a grocery store. Its a self-licking ice-cream cone that is not going to go away by math classes. This is what Government is supposed to be for, to protect its citizens against themselves.

        Let’s ask this question. If the Italian Mafia is prosecuted for racketeering by charging ‘loans’ of 15%, why are we allowing these places to legally charge 25% monthly interest?

      • 0 avatar
        fvfvsix

        “This is what Government is supposed to be for, to protect its citizens against themselves.”

        Whoa, Whoa… Just WHOA! That sounds like the craziest thing I’ve heard all day. Where the hell in ANY of the founding documents is _that_ an enumerated power, or even a stated objective.

        I’d argue that the title loan situation is a direct result of having Government coddle and stupidify generations of people.

        I’m sure we’ll differ, though.

      • 0 avatar
        infinitime

        @dolorean, you do realize that the baggers at the checkout depicted in one of the pictures, wearing vests labelled “H Mart” is from a chain a Korean supermarkets common out west. They are not a pawn shop!

  • avatar
    phantomwolf

    Just goes to show that there is a sucker born every minute. The reality is how do you get the ignorant to not damage the rest of society in an ethical, humane manner.

    • 0 avatar
      mklrivpwner

      Make them responsible for their actions and stop having the government bail them out. Educate them that government welfare is not a safety net for their tight rope act, but like an airbag in a car.

      Safety Net: I can risk anything (High debt, high interest) and try everything (luxury items, new cars, too big house) to make it as thrilling and dangerous (immediate gratification) as possible because the net (welfare) will catch me (fund my life) WHEN I fall (default).
      Air Bag: I keep a resonible speed and distance (spend within my means), I buckle my seat belt (build a savings), I watch my mirrors (have a budget and financial plan), but should I get in an accident (catastrophic life-changing event, i.e. disability, longterm illness,…), I know it’s gonna hurt (my finances and lifestyle will suffer), but at least the airbag (welfare) will stop it from being too bad (fund my recovery in a limited manner).

      Call me an ignorant ass, but our economy would be doing a lot better if people learned to live within their means. Smart Phones and the $100 (minimum) a month plans that go with them are NOT a civic right and should NOT be provided by the responsible American taxpayers. But your state governments are giving them away. Food Stamps are not to be used to subsidize your big screen TV. But people who are “struggling so very hard to get by” are buying them.

      And the detriment is not only an increased cost in your taxes to fund the habits of the irresponsible and ignorant. But it increases the cost of services as well. Your credit card percentages, your savings APY, your insurance costs, your cell phone service fees,… All increasing to subsidize the irresponsible who say skipping the bills and letting the company “cut its losses” is a good and responsible decision. But here’s the rub, the companys aren’t cutting their losses, no sir, they are simply shuffling those losses back into the deck and dealing them out to you.

      Don’t get me wrong, there are people out there that are genuinely put in a bad place by no fault of their own. Many of them deserve help. But it shouldn’t be a compulsory charge laden on those who are already struggling. You may argue that if those welfare services weren’t there, then they wouldn’t get help. And in some respects, you are right. But how many of you don’t donate to charities because there are services funded by the government that “pay for that already”. Or perhaps you don’t donate because, after the taxes you pay to fund those programs, you think you might need their help yourself.

  • avatar
    findude

    Car ownership and use exist within a social context. One of TTAC’s strengths is that articles like these look at this larger context and not just at cars themselves.

    There are people who believe the automotive era is drawing to a close; that personal, on-demand, long-range transportation for the masses is not a sustainable model. Perhaps the TTAC editorial staff would consider soliciting guest articles from the likes of Howard Kunstler? I’m sure there are other examples, but he is the one who first comes to mind.

    There’s also the problem of infrastructure maintenance. Consider this article: http://wtopnews.com/?nid=600&sid=1995119. Even if people keep their cars, it may become more difficult to actually use them.

    • 0 avatar
      dwford

      Car ownership, in a free market, is inexpensive. At every part of the process, multiple competitors keep prices in line – from the car dealers, to insurance, to gas. Car ownership is under assault by by the anti car establishment, forcing higher gas prices through environmental polices, onerous licensing requirements that discourage new drivers, high car prices through mandated technologies – all in the name of “helping” people. The goal is to shift people to public transportation.

      This flawed policy is manifesting itself in Connecticut. car ownership is very expensive here – insurance, gas, driver’s licensing and license plate costs. Our state has developed a state subsidized bus to take casino workers from where they live Hartford to the casinos. The state charges $15 per week for the service, but the real cost is much more and now the state wants to drop it, leaving these people in the lurch. So, we kicked people out of their cars and force them into public transportation, then don’t charge enough to cover the cost and end the service. So are these people supposed to quit their jobs and go on welfare? Is that the goal?

      Of course, the whole idea of a state subsidized bus for a select group of citizens is flawed from the start. These people should be car pooling, or their employer should be footing the bill, not the state.

      • 0 avatar
        Onus

        Hello fellow resident of Connecticut.

        I have meet with CT transit before. They subsidize bus routes since the people who use them have very little means to own a car. I’ve been in that list before too. Taking the bus to Manchester Community College from Vernon while it takes a long time, and you may have to wait a very long time on the way back. It works and the cost is great. A mere fraction of the cost the drive.

        But, the people i see on the bus have very very little money, and it all helps. I know many who rely on this just so they can work and barely survive.

        I do think the bus to the casino is a bit insane for such a cheap price.

        I drive now since i can afford too. Bought in cash, pay for insurance, gas, registration, do my own maintenance.

    • 0 avatar
      0menu0

      “There are people who believe the automotive era is drawing to a close; that personal, on-demand, long-range transportation for the masses is not a sustainable model”

      ^However, there is no realistic or workable alternative

    • 0 avatar
      psarhjinian

      Car ownership, in a free market, is inexpensive

      No, it isn’t. Much of the costs of owning a car are externalized. Imagine if you had to pay, directly, for things like roads, traffic enforcement, safety, medical, fuel security and so forth.

      That said, there’s no such thing as a “free market”. It’s about as fictional a term as “real communism”, and for the same reason: people are involved. There’s no way you can prevent a market from being manipulated by it’s more powerful participants (at which point the market is not free) unless you have regulation (at which point the market is not free).

      • 0 avatar
        Dan

        But we do pay directly for all of those things.

        The Fed government’s colossally mismanaged and continually diverted highway fund has gone over and into the general fund. For five years, out of half a century. They could mismanage five times the money just as badly – see ex. A, the Department of Defense.

        At a state level that isn’t true. My state not only funds 100% of transportation from car taxes but they’ve recently been shifting a full third of those away from roads to go to the education union instead.

        I read the Tax Foundation’s BS study that states subsidize roads too. Maryland subsidizes two thirds of road costs, they say. They say that by failing to count anything that isn’t a gas tax or a toll. I pay $120 in gas taxes a year (typical 12000 mi / 24 mpg). I don’t drive on toll roads. That’s next to nothing. It leaves out the $1800 I paid in taxes when I bought the car (average new car transaction price). I pay another $90 a year to keep it registered. They’re failing to count more than 3/4 of vehicle taxes.

    • 0 avatar
      dwford

      “No, it isn’t. Much of the costs of owning a car are externalized. Imagine if you had to pay, directly, for things like roads, traffic enforcement, safety, medical, fuel security and so forth.”

      We do pay for these things. It’s called taxes. We pay income tax, property tax, gas tax, tolls. All to cover the expenses of infrastructure. Government is regulating to the effect of increasing our direct costs of auto ownership, while undertaxing for the upkeep of the roads – which is why the roads/bridges are in such disrepair.

      Who would agree that a government run public transporation system is more cost/time efficient than individual transportation? Only those with a narrow, urban mindset. Try to apply the public transporation model to the larger, rural areas of the country and see what the costs look like.

      I have no problem with the government charging the correct taxes to cover the proper maintenance of our road infrastructure – even if it means taxes go up. I just don’t want the government using tax policy to influence my personal choices of transportation.

    • 0 avatar
      psarhjinian

      I know it’s called taxes. By virtue of anything being tax-funded we’re already out of the free-market sphere and into collectivism.

      That was my point: there’s no “free market”, only degrees and nuances of collectivism. Arguing about what your tax dollars should or should not support based on subjective, populist wants is exactly the paving stones on the road to hell that is, oh, California’s budgetary woes.

      Personally, I don’t want my taxes to pay for all sorts of things I find ideologically unpalatable, but I’ve come to realize that nickel-and-diming the tax system is a way to ensure miserable service for everyone

    • 0 avatar
      dwford

      I think we can all agree that we want paved roads and safe bridges, yet we can’t seem to accomplish this. I think we can also agree that we don’t want millions of uneducated people sitting home on the government dole, yet we seem to have got this down perfectly.

      • 0 avatar
        bunkie

        The counter to this argument is that if people were “on the dole” as you say, they probably wouldn’t have to do business with the title pawn businesses. I would bet that most of the former productive members of society who have burned through their unemployment and are now pawing their cars to put food on the table are not on the dole but are, as the Firesign Theatre put it “Too poor to afford a job”.

  • avatar
    lmike51b

    +1 1169HP

    “…the question that must be considered is whether the poor, tired and huddled masses of generations past would have sacrificed it all had they known that our government would so easily whore itself out to the powers that be…” I would like to think not. That this is the kind of crap our country was trying to get away from. We have a lot of these title loans here in the Houston area, and more going up all the time. I don’t believe in regulating free enterprise out of business, and there is a lot of money being made from these places by enough people, so I don’t see much doing the right thing happening. Maybe people will quit using them but more than likely it will be a situation where the “victims” will seek some sort of restitution for these so-called unfair business practices, and the taxpayers will foot the bill.

  • avatar
    obbop

    “There’s class warfare, all right, Mr. (Warren) Buffett said, but it’s my class, the rich class, that’s making war, and we’re winning.”

    • 0 avatar
      Dan

      Insurance Buffett, the public spokesman for more and higher taxes for people with 0.01% of his money.

      His class isn’t making war on the poor. His class doesn’t care about the poor one way or the other. The poor are incidental. His class is making war on the just barely rich to make sure they’re unable to catch up with him.

      He says an awful lot about higher rates and lower death tax floors. He doesn’t say a word about the loopholes and exemptions that let a guy worth 40 billion dollars claim 60 million a year in taxable 2010 income – a return of 0.15% in a year the market went up 18%.

      The biggest hypocrite in America.

      • 0 avatar
        dolorean

        @Dan, got to stop reading the Grudge report and worshiping Dave Ramsey. Your strawmen have less thought or truth. than Dorothy’s companion in Oz.

      • 0 avatar
        mklrivpwner

        Dan, You are right. He doesn’t say “a word” about tax loopholes; he says two: “Close them.”

        obbop, please don’t misrepresent the quote. He uses first-person pronouns simply to acknowledge that he is part of the rich class. During the same conversation from which the quote is sourced, he talks about the virtues of a strong middle class and ending the tax deficit (% of taxes paid vs taxable income). He talks about raising taxes on the rich and closing loopholes and returning capital gains taxes to a level equal to wage income and closing loopholes.

      • 0 avatar
        fvfvsix

        Dan – Nail on head. Buffett is the biggest fraud alive, and it makes me absolutely sick to see these so-called “collectivists” come to his defense. I guess they don’t teach logic in school anymore, either.

      • 0 avatar
        Landcrusher

        Mr. Buffett is a bigger hypocrite than that. One of his biggest moneymakers is tax avoidance services and investments. What he is really doing is getting the government to raise rates and make it harder to avoid taxes in order to drive more customers to him so he can skim the money he saves them with Byzantine schemes that the IRS and state legislatures can’t hope to figure out.

        He also loves to give interviews in Omaha and show off his Cadillac and upper middle class home while hiding or even lying about weekend getaways by private jet to stay in a manner most millionaires might enjoy once a decade.

  • avatar
    golden2husky

    Good thing the flame rule ban expired at midnight! This would have made quite the string of comments.

    These types of “businesses” prey on the ignorant, yes. But they also prey on those in the lower economic bracket that for whatever reason, find themselves in a financial predicament. While I don’t think a ban on the industry is right course of action, I do feel that any lending institution should have a mandated cap on the maximum rate that they can charge. Like a certain percentage tied to prime for example. It is easy to say who cares about these people, but the first paragraph of the story says it all. People who once contributed to society in a productive way are now being used to the point that they are broken in both cash and spirit. How can one who can no longer get to work hold a job? Once you are so far behind you just don’t care anymore; you have nothing left to lose. That’s why poor people often drive without insurance…there is nothing to take from them if they get caught. So we pay in uninsured motorist rates.

    Something to keep in mind that in general, it is expensive to be poor. Banks are not interested in people who can’t keep a good balance in their accounts. So they pay check charges, they get caught in overdraft fees, etc. No mobility means the local store in the ‘hood instead of large stores with competition. That means a much higher cost per unit. What would be a small surprise bill for most means a choice about feeding the family. Prevention takes a back seat to buying food, so health problems become widespread. I already can see the comment posted “yeah, but why do the “poor” have top tier cable and a 52 in TV?” Well, some might, but that goes back to making poor choices. And no, those who work should not subsidize those poor choices, but neither should an opportunistic sc**bag get rich on them either.

  • avatar
    geozinger

    What has happened to Clayton County? Years ago, I used to live in Forest Park, and was pretty familiar with the area that you describe. It sounds like it has fallen on hard times.

    Having lived in the greater Atlanta area, I can attest to how necessary a car is for daily life. The rapid transit system, MARTA, was constrained by each individual municipality’s acceptance or denial to let it operate in their territory. You need a car to get around, period.

    Your article brings up the old argument about how much regulation is necessary in a “free” market, and apparently the State of Georgia feels very little is appropriate. The ad hoc “licensing” of the title broker in question brings to mind stories of the old boys network. A little greasing of the palms goes a long way, for sure.

  • avatar
    Dave M.

    What is happening to America?

    Nothing unusual. People have been getting screwed forever.

    What is highly bothersome is apparently Clayton County officials don’t give a shit.

  • avatar
    Gardiner Westbound

    Clearly the larger issue is corrupt politicians and civil servants.

    Reports say the economy is so bad Exxon-Mobil laid off 25 Congressmen!

  • avatar
    Jeff Waingrow

    Gardiner, I heard the same thing. But let’s not fret. I understand it’s really only a relatively small percentage of the pols they have on payroll and the laid off have been assured that they will be the first to be rehired.

  • avatar

    “There are people who believe the automotive era is drawing to a close; that personal, on-demand, long-range transportation for the masses is not a sustainable model”

    Yeah well they never lived in Florida

  • avatar
    tbp0701

    Potent article. I see a lot of this, too, and am always surprised at how many predatory lenders there are, especially when it comes to cars. The only thing I can think of is to do everything we can to educate people of the pitfalls when dealing with these places, to somehow show them that the terms and interest rates of most of the loans will have them ultimately playing far more than they imagine, and often that these deals will put them into a circle of debt that will be difficult to escape. But I’m not sure how to do that. That may be a hopeless task, but I think we can do far more in this respect.

    I’m also always surprised how so many people are so willing to take advantage of people, especially ones in serious need, and presumably find a way to live with that.

  • avatar
    getacargetacheck

    Every nation has its own mythology to keep its people in line. The USA is no different. From the very beginning, the USA has been governed by the rich elite at the expense of the lower classes all while promoting the idea that people have “rights” and “democracy.” See Shays’ Rebellion for proof: http://en.wikipedia.org/wiki/Shays'_Rebellion

    BTW, the South, in particular, never gave up on the idea of slavery. The institution just became more subtle, more like the indentured variety without the master’s responsibility. A pervasive Calvinist mindset helps lay the blame on the slave.

    Happy Independence Day everyone!!!

  • avatar
    CarPerson

    A book that explores this phenomena is Broke USA: From Pawnshops to Poverty, Inc. by Gary Rivlin.

    It covers many of the traps those who need a few bucks are lured into. Auto title loans is just one of them.

  • avatar
    50merc

    Those “huddled masses of generations past” left nations in which most commercial activities were under the control of aristocracies and self-protective guilds and cartels. The word “copyright” reminds us that the King once possessed that right, and only by royal permission could one print a book.

    When I lived in Georgia I learned the phrase “poor people have poor ways”. That is, the poor tend to make bad decisions. For example, low income people are more likely to smoke. Or pile their grocery carts high with soda pop and snack foods. Education can help but won’t guarantee good judgment.

    Georgia should tighten regulation of such outfits as title pawn shops. But regulation can have bad consequences. The taxi business is usually cartelized by government restrictions. If individuals were free to offer jitney service, the poor and working class would have another good transportation option.

    • 0 avatar
      ihatetrees

      That is, the poor tend to make bad decisions. For example, low income people are more likely to smoke. Or pile their grocery carts high with soda pop and snack foods.

      One area of corruption that’s never mentioned. – the Food Stamp program. It’s a borderline subsidy to the snack / junk / sugar / instant food industry. Heck, I’d vote for increasing the food stamp allowance if the increase were restricted to fresh fruits and vegetables.

    • 0 avatar
      Onus

      I totally agree. I live around many of these people and you hit the nail on the head.

      I just work a part time job. Or well used to as of today. Save most of my money and live below my means. I never feel poor. In fact losing my job is more of relief from the insanity at that place. I got enough saved up the go for awhile without work.

  • avatar
    forraymond

    This plan started in 1980. It was called “trickle down economics.” This is what has been the trickle down part = the middle class being eliminated, lowered standard of living, destruction of public education – it all has led to the expansion of predatory lending like these title pawn loan sharks. Thank Reagan, Bush, and Clinton for leading the way to the end of prosperity for Americans. This current one has not even mentioned trying to fix it – END NAFTA, fix America!

    • 0 avatar
      psarhjinian

      As much as I’d like to take a poke at Reagan, he’s not really the start of this: it began much earlier, generally with the beginning of Liberalism’s fall in the US under Kennedy. The corner was truly turned under Nixon.

      The United States has never really had a grassroots socialist movement (the rest of the world doesn’t have one, either, what with the rise of the “New Left” under Tony Blair) which is unfortunate because this really is their kind of cause to champion. The libertarians on the right aren’t really equipped or willing to address this kind of issue until it gets really bad.

    • 0 avatar
      28-Cars-Later

      The plan started before that and its called Globalization, friend. Public education was always meant to indoctrinate the slaves, John Taylor Gatto has written a plethora of valueable information illustrating this. Remember, the children of people of privilege seldom attend schools with the children of serfs for a reason.

  • avatar
    mpresley

    When we talk about “predatory” lending we fail to identify those that are “preyed” upon, as if they are complete innocents. In some way they are. Usually (although there are always exceptions), people with a large amount of debt, and those frequenting these sorts of establishments are those who cannot understand the concept of delayed gratification. They are often not very smart (IQs at least one SD below the mean, often more), and are likely living on some sort of welfare dole (or several forms). They probably don’t have much of an intact traditional family (something that’ typically’ is a wealth builder). Their “event horizon” is about an hour, maybe a day or two at most. And so on and so forth.

    I recently was driving through a section of town populated by these types of folks. There was a tire place that was hawking “rent to own” tires with large flashy chrome wheels (larger than nature intended). I thought to myself, who would enter into something so ridiculous as rent to own tires? I looked around, and it was all clear.

    At the same time, and from a middle class perspective, these sleazy pawn dealers are pikers compared to the big boys: like those running the US Federal Reserve.

    • 0 avatar
      krhodes1

      To add to mrpresley’s points – it’s those same people who breed like rabbits, ensuring more and more just like them. I was really struck by this the other night – a group of us were out to dinner at a nice restaurant, eight guys in their early to mid 40s, all childless, all of us well-paid professional types. NONE of us have any intention of having children! Yet we all are exactly the sorts who could afford to have children and raise them properly, send them to good schools, etc.

      I live in a relatively poor working-class town (paper-mill town where the mill is all but closed), I see “babies with babies” all over the place, usually more than one dirty urchin in tow. Mom or Dad covered in tattoos, smoking away as they push the stroller down Main St. – this is a town where you only walk if you don’t have a car.

    • 0 avatar
      psarhjinian

      This is not entirely new, but that these people now depend largely on credit, instead of having a reasonable job, makes matters worse.

      We, as a culture, are using credit to stimulate buying because we’ve gutted real wages.

      We used paid people a decent figure and made it hard for them to borrow. Now, not everyone is smart, capable and forethinking. Not everyone can be, and it’d be unhealthy if they were because you need, to paraphrase Huxley, “Deltas” who can do delta-level work that Alphas and Betas wouldn’t do, or would go nuts trying to. Not only does paying people a reasonable wage give their offspring a better chance to get out of the gutter, not giving them credit in lieu of wages would prevent them from making things worse.

      Have you ever wondered why this happens? Ever wondered why consumer spending is so paramount? Consumer spending ensures the rich get richer, but so does keeping the wages the rich pay low. Credit is the popsicle-sticks-and-glue solution to the question of “How do we maximize revenue?”

      The funny thing is, we have alpha and beta people grousing about deltas’ wages out of some kind of intellectual superiority complex. Things wouldn’t be quite so bad, I suspect, if everyone was paid an good living wage, rather than participating in a race to the bottom and never, once, wondering who pulled the trigger on the starter’s pistol.

    • 0 avatar
      Stingray

      To all you three. I recently went to Italy, and was shocked to see personally what I kinda knew from the stats I read on the MSM. The population is getting old.

      My baby (or toddler, since he’s 17 months old) was treated as a superstar everywhere we went. Which was right. My wife and me reasoned that this behavior must have to do with the fact that there are very few kids.

      I have been told by one iranian, that in the industrialized areas of the country a similar situation like the one reported by krhodes1. He himself was one of them, at least his family got kids after he was past his 30′s.

      Back in Venezuela, I see the opposite situation. Many kids. But the “middle class” here tend to have less (usually no more than 2) than the lower classes.

      I live too much close to my tastes to the lower classes, and one of the reasons they tend to have many babies is ignorance, prejudice, the women specially think that they can tie a man with a baby and tend to have many (from different fathers).

      Many of them have a way better cell phone (local status sign) than me, but their refrigerator content sucks.

      And there’s people inside the factories lending money at 10-20% per month, in towns, in barrios… I borrowed money from one of them and can tell you is not good. Workers usually have so much debt that these guys take most of their vacation and final year bonuses payments.

      I don’t know over there, but here the poor go to drink like there’s no tomorrow every Thursday/Friday, spending most of their salary (paid weekly) and leaving very little for food, bus, etc… then they have to borrow, have more than one family, etc…

      I learned most being supervisor of workers.

      psarhjinian is right, people deserve to earn a decent salary for their jobs. But if socialism is the same rubbish Mr. Chavez is imposing here, ummm no, I’d rather pass.

    • 0 avatar
      NulloModo

      There are a number of reasons the poor tend to have many kids. Someone who was brought up without a strong nuclear family doesn’t necessarily feel the shame in having multiple children out of wedlock from different partners that someone who was brought up in a traditional family would. People tend to play by the rules of their particular society, and if in the ghetto everyone is having lots of kids indiscriminately, and there is no societal shame or taboo on it, a huge factor preventing that behavior no longer exists.

      Added to that the short term financial gain that comes from having more children, after all more kids equals a bigger welfare check, and you have
      women popping out babies to have more money to blow on fake nails and hair weaves.

      The only solution I see to the problem is a complete overhaul of our childrens’ services and welfare laws. Welfare should first and foremost be a very temporary solution, a few months at most, and should depend on proof that you are actively searching for employment. If at the end of the allotted time you don’t have a job, the checks should stop. Now, obviously it wouldn’t be fair to subject the children in such homes to starvation, but to break the cycle we need drastic action – if the parent can no longer support the children, even if it is due to the welfare checks being stopped because the parent won’t go get a job, then the children need to be taken in as wards of the state. We can set up boarding schools to house and educate these kids away from the ghettos and give them a decent chance at a successful life. Yes it may be more expensive up front, but in the long term turning around entire communities through breaking the cycle will save more money than it costs to take those kids out of the destructive environment.

    • 0 avatar
      european

      @NulloModo

      i absolutely agree!
      not only that, but i’ll up your recommendation with
      the following excerpt about german unemployment benefits
      from wikipedia (http://en.wikipedia.org/wiki/Hartz_concept)

      “To receive payments, claimants must agree to a contract subject to public law. This contract outlines what they are obliged to do to improve their job situation, and when the state is obliged to help. Unemployed persons may be forced to accept any kind of legal job. This compulsion is restricted by constitutional rights, like freedom of movement, freedom of family, marriage and ‘human dignity’. If taking on a specific placement is deemed reasonable by the responsible agency, not applying will result in a reduction or even complete suspension of the appropriate payment.”

    • 0 avatar

      Sure. Mr Hartz’s (the disgraced hooker-scandal HR director of VW) “forced to accept any kind of legal job” concept culminated in women being forced to accept a job in a whorehouse – or lose their benefits. After all, prostitution is legal in Germany, and a whorehouse is a legal enterprise.

      Hartz is a member of the Social Democrat Party and the German metal workers union. He received a two year suspended sentence for his involvement in the Volkswagen scandal. His authorship of the “Hartz Modell” remained unpunished. May that be a lesson to those who idly use the word “socialism.”

    • 0 avatar
      Chicago Dude

      Nullo,

      “The only solution I see to the problem is a complete overhaul of our childrens’ services and welfare laws. Welfare should first and foremost be a very temporary solution…”

      Step out of your time machine. Clinton and the Republican Congress already did this. 14 years ago.

      Reagan invented the concept of the welfare queen out of thin air, by the way. He was pretty famous for doing stuff like this, and many people knew it but didn’t care.

      Modern American welfare is for no more than 2 straight years and a max of 5 years over your lifetime. The states are allowed to be more strict if they want to be, and one of the reasons for the increase in free preschool for poor kids is that if a single mother is not able to claim that child care issues are the reason she cannot work then the states are allowed to be even stricter still.

    • 0 avatar
      geeber

      There is a time limit on Temporary Aid to Needy Families (TANF) – the program that most people think of when they talk about welfare. But these time limits are enforced by the states, and what beneficiaries must do to stop the time clock from ticking varies from state to state. In some cases, just looking for work, as opposed to actually working, can waive the time limits.

      Government assistance also includes food stamps, free health care for children (CHIP) and Medicaid. (And then there is the free school lunch program, and, for many areas, free breakfast and dinner, too.)

      There is no time limit on these programs. Plus, you have a baby, and you hit the jackpot. While there may be time limits for ADULTS on welfare, there is no time limit for children. They remain eligible for taxpayer-provided services until they hit the age of 18.

      Funny thing is that people who have actually worked with the poor – such as my wife, and her former co-workers in social services – often make Rush Limbaugh sound like a member of the editorial staff of The Nation. Meanwhile, posters whose actual real-world experiences in working with the poor could charitably be described as “limited” believe that Ronald Reagan made up the idea that recipients of government benefits exploit the system to their advantage and prefer relying on it, as opposed to getting a job and bettering themselves.

      I would suggest that these uninformed posters talk to my wife. They’ll actually know what they are talking about.

      • 0 avatar
        Toad

        …or my wife. She was a special ed teacher, and many of her students were from households where government support was the sole source of income(s) and had been for generations. On parent teacher nights she would often have only a handful of parents (out of over 100 students) show up because most simply did not care.

        However, some government benefits get cut off if the kid gets kicked out of school, and THEN an angry, usually belligerent parent would definitely show up to yell (or worse) at teachers and staff for mistreating or discriminating against their poor child. Extra fun if the parent was drunk for the mid-day meeting (happened with surprising frequency).

        BTW, there are plenty of welfare benefits and programs that extend into perpetuity; Social Security Disability is now an annuity for millions. If you get out of your white bread, upper middle class world and talk to some folks in the ghetto or trailer parks you will find that ways to access these programs is shared widely. Attorneys advertising on mid-day television market SSI disability services more widely than slip and fall or medical malpractice claims.

        Socially and politically we are backsliding into the worst of the 1970′s. At least the cars of today are a lot better.

    • 0 avatar
      NulloModo

      Chicago Dude –

      2 years is still entirely too long. A period of maybe 6 months, with 1 year total in a lifetime would put a bit more urgency to the job search.

      Geeber –

      I am sure there are some people more than happy to live on the dole, as well as others who find it distasteful and want to be self-sufficient. However, as long as there are enough programs out there that make it easier to live off of handouts than it is to take an unpleasant job and work your way out of a bad situation, far too many people will choose to live off of the handouts.

      One of the biggest arguments I always hear about illegal immigration and the loss of jobs it brings is that the illegal immigrants do jobs that the rest of us don’t want to do. That very well may be true, I certainly don’t want to work out in the fields picking tomatoes or peppers, clean restrooms at rest stops, or wash dishes for minimum wage, and someone who has the choice of something like that vs. waiting in line at the welfare office for a check might just choose to live with the indignity and keep picking up the checks. When we take those checks away though, and that person is faced with the option of doing nothing and not eating, or spending the day working hard for little pay but being able to put food on the table and paying the rent, that second option will start to look good once they get hungry enough.

      Not to sound heartless, I know that many of the poor in this country didn’t have the most chances growing up, and were born and raised into bad situations without good role models, but this is still America, and there is still plenty of opportunity for those willing to work for it. If someone can sneak across the border in the middle of the night without knowing the language without any proper identification or means to lawful employment and still work hard every day and eventually make something of themselves, there is no reason that people actually born here with actual citizenship can’t do it.

  • avatar

    We used to have usury laws…but they were “deregulated” so that state laws were now subservient to federal laws. Every credit card has a 30% default rate now too.

  • avatar
    psarhjinian

    You know what’s funny, or sad, depending on how you look at it?

    About the only thing Jesus Christ ever went whoop-ass on was usury. Everything else—homosexuality, capital punishment, adultery, collectivism—don’t get mention in the New Testament. Usury does.

    And yet a vehemently Christian nation gets it’s knickers in a twist about everything except usury.

    • 0 avatar
      educatordan

      The sadder thing is that more people tend to ask themselves WhoWouldJesusHate rather than WWJD?

    • 0 avatar

      I’m glad (and a little surprised!) most of these comments are intelligent – I believe that car people are smart, despite Brock Yates’ long unjustified tenure at C/D.

      That said, a (thankfully precious) few comments are severely backwards and incorrect. Stingray, lmike, european – I’m talkin’ to you.

      African Americans may be over-represented (as only 12% of population) victims of usury, still the vast, vast majority are white. Perhaps the great-great-great grandchildren of the same people who worked the farms of the slaveowners with blacks.

      One of the ways we allow ourselves to be exploited is the belief and proselytization of self defeating dogma.

      Nonsense – like perverted, misleading comments on “culture of poverty” and malthusian “too many babies” bullshit – is useless. Equally disabling are the bullshit affirmations – “I’m middle class and I don’t have any children, I’m so smart!” – in the place of real analysis.

      No one deserves to be a victim. 400% interest is a fucking crime. A government that allows that is a criminal accomplice. A course in “money management” won’t solve the problem when some people spend their lives/careers figuring out how to game and trick, see http://www.gotchacapitalism.com/.

    • 0 avatar

      Of Course. there is a large difference between “renting money out” and exploitation.

    • 0 avatar
      Stingray

      @ Sasha Abayomi.

      I wrote about the situation I see in Venezuela, my country. And find some parallels with what I have seen here.

      I never made a reference about stereotypes related to black americans (I not even going to bother using the PC term African American, sorry). And being black is not an stigma, it’s perfectly normal like being white, yellow or brown. What you have in your mind is what defines you, not your skin color.

      I myself had to recur to usurer to get some money for one urgent payment I had to make. And I can tell you it’s killer. Not an experience I’d like to repeat. And I’m educated, etc…

      I saw many of my workers suffer because of this, and didn’t like it (still don’t). But I can’t make them change their lifes, only give advice and hope they follow it. Sometimes their living conditions are so harsh (poorly built houses in dangerous land, crime…) you don’t even want to go into the deepness of it.

      I remember one about 6 years ago that was earning minimal wage, had 11 kids and was the sole income in his home. He made jokes about his refrigerator content (water and light, like a big square with a fountain), but is hard to laugh at something like that. And that’s one case.

    • 0 avatar
      geeber

      psharjinian: About the only thing Jesus Christ ever went whoop-ass on was usury. Everything else—homosexuality, capital punishment, adultery, collectivism—don’t get mention in the New Testament. Usury does.

      Wrong. When the woman who was about to be stoned by the Jewish leaders for adultery was released, Jesus specifically told her,
      “Go and sin no more.” Which, we can conclude, means don’t commit adultery (a sin) again. That sounds like a condemnation to me.

      Homosexuality was not a sanctioned activity in Israel at that time, which is why Jesus never said anything about it. Based on your standard, he approved of spousal abuse and pedophilia, because he never said anything about those activities. Jesus condemned the sins named in Mosaic Law that Israelites were either ignoring or winking at. They weren’t ignoring homosexuality (you could be punished by death for engaging in it) or even adultery. (As shown by the example of the woman about to be stoned for being caught in the act – Jesus commented on it because they brought her to him, and demanded to know what he would do. He also probably wondered why the man wasn’t being stoned – Mosaic Law called for both women AND men who engaged in adultery to be sentenced to death.)

      Homosexuality was condemned in the Old Testament, and Jesus specifically said that he came to FULFILL the Law, not replace it. (Contrary to your assertion in an earlier thread that the New Testament was meant to replace the Old Testament – this is incorret. The New Testament is the fulfillment of the Old Testament.)

      Those activities were also condemned by the Paul in his epistles to the various churches.

      As for capital punishment – it was sanctioned by Mosaic Law.

      Sasha Abayomi: Nonsense – like perverted, misleading comments on “culture of poverty” and malthusian “too many babies” bullshit – is useless. Equally disabling are the bullshit affirmations – “I’m middle class and I don’t have any children, I’m so smart!” – in the place of real analysis.

      Yet your post contains no analysis, just a bunch of ad hominen attacks substituting for any facts. And please note that there is a culture of poverty in this country, and both liberals and conservatives have written about it. And, if you can’t afford to have one children without taxpayer assistance, then giving birth to one constitutes having “too many babies.”

      Anyone who ignores this is either woefully ignorant or willfully clueless.

  • avatar
    joeveto3

    Does anyone know if these pawn shops exist in Canada? Europe?

    Or is this an American thing?

    • 0 avatar
      fabriced28

      Usury laws still exist in Europe. As an example, anything above 20% a year for lending less than 1500€ is considered usury in France. And the more is lent, the lower the threshold for usury is.

      When you add to this the existence of widespread public transportation, you can conclude that some unemployed people here have a lot less of an excuse for “not being able to find a job”. But the benefit to the society is obvious, and I did not think before reading this than usury, an antique evil, could be so widespread in a first-world country.

    • 0 avatar
      nrcote

      Pawn shops do exist in Canada. But “section 347 of the Criminal Code makes it a criminal offence to charge more than 60% interest per annum” (www.parl.gc.ca/Content/LOP/researchpublications/prb0581-e.html).

  • avatar
    tiredoldmechanic

    joeveto3,
    These types of pawnshops do exist in Canada. They are known as payday loan providers. In some provinces in recent years there have been some regulations strengthened to police such parasitic vermin, but you can still get yourself in a world of hurt very quickly. What always amazes me is how many people get themselves into this type of trouble. My employees are unionized, make good money and have all the usual benefits. Twice in the last 5 years I have had payday loan companies attempt to garnishee wages from one of my employees. Both made $50,000 plus per year, both young guys without a lot of real responsibility, and both with all the toys like quads, snowmobiles, new trucks etc. At least they had the assets to sell and get out from under.
    I’m pretty much a conservative, free market kind of guy but this type of business enterprise is unconscionable and should be regulated into oblivion.

    • 0 avatar
      Toad

      I have contractors who make good money and make the same bad decisions (one has 10 kids with a variety of women). While I agree that interest rates should be regulated, there is a need for some kind of payday or title loan business because the customers need the money and are going to get it somewhere.

      If high risk borrowers need a quick short term cash loan, have bad credit, and little in collateral, and nobody offers legal loans then loan sharks will step in to fill the void like they always have. If you thing getting your car auctioned off is cruel, imagine getting your fingers or legs broken. BTW, as an added bonus drug dealers make excellent loan sharks since they already have cash and an existing “enforcement mechanism.”

      Banning things you don’t like usually does not work; see past alcohol prohibition or our current war on drugs. A little regulation would go a long way to help while preserving a product people obviously need.

    • 0 avatar
      ihatetrees

      @tiredoldmechanic:
      >>I’m pretty much a conservative, free market kind of guy but this type of business enterprise is unconscionable and should be regulated into oblivion.<<

      I understand that. This business can be ugly.
      But banning can have unintended consequences, such as Loan Sharks. Note they're not called "Black Market Loan Officers" or "Loan Dealers" or "Loan Kittens".

  • avatar
    european

    @for all those guys that yell “CLASS WAR”

    it’s always easy to blame someone else for
    your personal failures.
    like black america, blaming slavery for all their
    misfortune of today, while it was 1865!! when slavery
    was abolished.

    • 0 avatar
      0menu0

      “like black america, blaming slavery for all their
      misfortune of today, while it was 1865!! when slavery
      was abolished.”

      ^I’m gonna have to disagree there. While it is true that slavery was abolished in 1865, there was state sanctioned(mandated)segregation and oppression of Negroes. From about 1600 to about 1965 or so Blacks had no rights and were treated as subhumans. My generation(born 1971)is the first to even have a remotely equal chance in life. To expect to reverse the effect of generations being Jim Crow-ed into oblivion in one lifetime borders on lunacy.

      • 0 avatar
        Dan

        There’s an enduring myth that the civil rights act of 1965 was just for blacks. As if Jews, Asians, Latinos hadn’t spent the past 200 years being treated like sh-t too.

        That myth endures for a reason. I’ve never seen a Jewish man tell me the Holocaust is why he can’t pull his pants up and speak english to get a job. Your great grand dad had to drink out of a dirtier water fountain? My great grand dad was gassed.

    • 0 avatar

      You might want to read or watch “Slavery Under Another Name,” which highlights the convict lend/lease system that enabled a form of neo-slavery all the way up to the 1950s and 1960s. It was common for law enforcement to accuse a random black man of “vagrancy,” arrest him and subsequently lease his labor out to steel mills, mines, farms, etc.

      Combine that with Jim Crow laws that sought to socioeconomically suffocate black society and it’s no wonder I start seeing red when someone pulls the “but they abolished slavery in 1865!!” bit.

  • avatar

    The question remains: where will people who need short term loans go?

    Every economy needs lenders of last resort. I’m not happy with the usurious interest rates, but often a car is the only “bankable” asset the working poor have.

    If you drive the pawn shops out of business, you’re virtually inviting loan sharks to operate, so whatever regulations there are should make sure that the loaners can actually turn a profit.

    Actually, it’s not the pawn shops that are the ones who most frequently exploit the working poor. Utility companies, banks, government agencies, all have policies and fees that are deliberately set up to generate revenue from those on the economic cusp. Rich folks don’t overdraft many checks or have to pay the gas company $50 to turn the gas back on.

    BTW, if you notice, in the story, a private business can only be so corrupt. To be maximally corrupt, you need the cooperation of government.

    • 0 avatar
      bunkie

      I see your point, but, in essence, we have legalized loan-sharking. One can argue that title-pawn outfits won’t break your legs if you default, but, on the other hand, we can’t send the title-pawn bloodsuckers to jail.

  • avatar
    AJ

    Ignorance has it’s price, but unfortunately we all pay for it.

  • avatar
    segfault

    “Any American without a car is very limited in their ability to find employment, and this reality costs money for everyone.”

    This is a very slippery slope. This is the same reason that our DUI and “no insurance” laws are so lax compared to other developed nations.

  • avatar
    ihatetrees

    These sleazy pawn places also have a huge presence outside Georgia military installations (Fort Benning / Stewart). I wouldn’t doubt the business and legislative history of Title Pawns has its roots in lending to the military.

    Financial ignorance and a certain mindset conspire to make these businesses.

    Edit: Note this was not intended as a slight to our service members. I just recall my own indestructible attitude as a young infantryman (flush with bonus cash) – after getting through 3 months of Benning… I was once young and dumb…

  • avatar
    TwoTone Loser

    Georgia is filled to the brim with stupid. This article is a tiny tip of multiple icebergs. Here is exactly why, broken into easy bits:

    The year is 1988:

    The natives, while they weren’t rocket surgeons, were basically a cool bunch of people living out their rural lifestyle. No problem.

    Then the Job Boom exploded. That brought in people ONLY interested in money, making money, turning Georgia into the worlds biggest strip mall. No museums, no institutions, no neighborhoods. The houses had to be built quickly.

    The kids born in 1982 or so get to grow up in this mess only learning from the culture of sales. There is a fast food joint every fifty feet. This must be normal to them. And, since everything easily visible is less than 20 years old, any history is deleted. These kids are literally the first generation. To them, nothing exists before 1988 because nothing is older than that.

    Well, it gets better. Like an uncontrolled cancer, buildings are built so quickly on the antiquated road system that you cannot walk or ride a bike anywhere. Video game consoles become louder and cheaper. You don’t leave your house for any reason because there is nowhere to go and do things. You don’t care much about school either, as the low skill set jobs are plentiful and you are sure to get one.

    As the boredom increases you dabble in controlled substances. Meth begins to override a lack of dentistry as the number one cause of rotted teeth. If your lucky, you can stick to weed and maybe keep your looks, but live in a brain fog. Jerry Springer begins to look really interesting.

    And then as quickly as it gets built, Georgia dies. It is now 2008. You get left with the carcass of a city and scampering consumers willing to do anything for a buck. Their jobs pay well but they are in debt because there are already so many places to spend their money. Their houses are made of tin and paper. The children don’t talk to the parents because they are nestled deep in their social networking systems, the cheapest form of entertainment.

    They are also need some fast cash.
    Do you need a title loan? We are here to help!

    They don’t know better. Only those who grew up outside it see the difference.

    • 0 avatar
      european

      yes sure, its societies fault, some fatass kid
      is rather playing nintendo than reading a book.
      sure, blame everyone else, why the hell not…

      btw, Jerry Springer *ROCKS* :-D

      http://politicalhumor.about.com/library/images/blpic-morans.htm

  • avatar
    wnoh41

    Nice article on msn btw.

  • avatar
    obbop

    The MANY costs associated with mega-MILLIONS of illegal aliens has an especially pronounced impact upon USA working-poor citizens.

    Sadly, divide-and-conquer is one of the tactics desired by those within the USA who are waging class war against the populace.

    I believe the “powers that be” desire to install a true oligarchy some day.

    I fear the Union is doomed.

  • avatar
    joeveto3

    What’s remarkable, is that if any of us were to approach one of these individuals, and offer them, say, $900 for their $4000 vehicle, they’d most likely tell the person making the offer to go pound salt. But in essence, with these pawn brokers, they’re doing just that.

    I’m also amazed at what appears to be a lack of competition between the pawn brokers and other lenders. I mean, I’ll gladly lend these folks the money at a rate lower than 400%. I might even be thrilled to loan them the cash at 75 or 100% interest. Heck, I might even go a lot lower than that. We’re talking secured loans.

    So why such a high rate? Is it the inability or unwillingness of the borrower to shop for a lower rate? Is shopping for a lower rate too high of a concept? Is this the high math and finance of which we speak?

    More selfishly, should I quit my job and set up shop down south making loans at a paltry 75% interest rate? Or will I be run out of town by the folks who are charging 400%?

    Someone earlier made a point regarding the lack of a social taboo (in many circles) when one has a child out of wedlock, or many children out of wedlock with many different fathers, or men impregnating women and not supporting, providing for, loving the resulting children. I would argue there is a similar dynamic taking place when it comes to personal finances. These folks live in a not-so microcosm of society where lack of personal financial management is acceptable. The 20″ rims, expensive sunglasses, big car stereo speakers, etc., the perceived financial success is valued more than (real) financial security, by most in that society.

    The cat with the nice clothes and the bling is more apt to be given a shot at impregnating one of the local ladies than would be the gentleman with a steady job, who works long hours, takes the bus, and wears a work uniform.

    I believe this is a result of capitalism operating at the lowest socioeconomic levels. We convince folks it’s more important to have things than to be able to “do things.” Folks’ skill sets are dwindling, their ability, desire, and opportunity (jobs exported) to provide for themselves spirals downward correspondingly, and their self-esteem goes right down with it.

    In the end, the only thing they really (think) they have, is what they can wear on their backs or the steering wheel they can grasp with their hands. The entire mentality is pathetic, but it’s fueled by so many different factors (sociological, political, economic, etc.), it’s so complex, I don’t know what can be done to address it, beyond something drastic and probably illegal, and most likely not acceptable to the ACLU and the targets of the “fix” themselves.

    Lest anyone be mistaken, I don’t for a second see this as a “black” issue, but rather a “poor” issue. There is a “poor” mindset in our society, and it’s growing daily. Families are either broken, or they never get off the ground. And this recession, and utter decimation of the middle class is pouring fuel on the fire of despair.

    In the end…we ALL pay for it. And yes, 400% is criminal and should be dealt with accordingly.

    • 0 avatar
      Chicago Dude

      “I’m also amazed at what appears to be a lack of competition between the pawn brokers and other lenders. I mean, I’ll gladly lend these folks the money at a rate lower than 400%. I might even be thrilled to loan them the cash at 75 or 100% interest. Heck, I might even go a lot lower than that. We’re talking secured loans.

      More selfishly, should I quit my job and set up shop down south making loans at a paltry 75% interest rate? Or will I be run out of town by the folks who are charging 400%?”

      You won’t be run out of town for charging 75% interest. You will more likely just go out of business. Loaning money to poor people is really really really risky. Yes, it is a secured loan, but do you have the ability to secure the secured assets? Mr. Lang had a piece not too long ago about the costs of doing so…

  • avatar
    european

    @Bertel

    Ja mein Gott Bertel, hast du den Artikel
    überhaupt gelesen? Niemand wird doch gedrängt eine
    Prostituierte zu werden!! Nur reine Panikmache.

  • avatar
    george70steven

    Use debt and credit as a substitute for earning power. Cut the social safety net for tax breaks that mean nothing to the bulk of the working populace. That may be a hopeless task, but I think we can do far more in this respect.
    online car insurance quote

  • avatar
    danio3834

    Who’s fault is it when these customers make poor decisions? I guess that’s the point of the article.

    I’m not particularly keen on regulating these businesses out of existence as that affects people’s livelihoods as well. As long as they aren’t using any fraud or coercion, putting them out of business would be based soley on the premise of usury.

    While some may default on these loans, they also provide a service to others who successfully pay them off.

    So in my opinion, legislating these businesses out of existence only addresses (maybe) one small symptom of a much larger problem. Banning title pawns likely won’t help these people avoid destitution, but might prevent them from having the cash to put food on the table.

    • 0 avatar
      bunkie

      I don’t mean to make excuses for peoples bad decisions, but when you live under a never-ending onslaught of advertising and your situation is deteriorating, I’m not surprised that people make bad decisions. They are exceptionally stressed out. Stress distorts reality in even the best of circumstances. Add to that that the ads are deceptive and use “trusted” spokesman (I’m referencing the Money Mutual ads with Montel Williams) and the fine print is so small and so briefly displayed, is it any wonder that people succumb?

  • avatar
    AMC_CJ

    Businesses keeping the poor poor…. Sorry, a grown adult signed that line, I’ve known people who have gone through this, lost their vehicle, and their your typical life-idiots.

    But let’s just legislate the dumb and ignorant a safety net to make up for their own short comings. I don’t have much respect for these companies, or about really anybody that makes their living off the sheer interest rates of other people’s money while doing nothing. BUT, I also have no sympathy for grown adults who over many years can’t get their lives together. People struggle, good people sometimes fall on hard times, but let’s not use such a small minority and prop them up as the rule rather then the exception.

    At least this article had the figures, facts, and a lean towards a educational benefit. But I’m disagree strongly with it’s overall tone.

    • 0 avatar
      danio3834

      If anything, bad money decisions are significant life lessons. In my younger days, I once made a bad financial decision to finance a newer car I really couldn’t afford.

      After a year fresh out of high school scraping to make the note and insurance, the car got totalled and the insurance company paid it out. It was a Godsend and I vowed to never make such a bad financial decision again. In fact I vowed to never lose money on a car again. Which I’ve done really well on for the most part until now, when in a much better financial position, have a new car again.

      Point being, we usually learn from our mistakes. Should someone have their car reposessed, they’ll be more apt to take a hard look at their situation. Of course there are many who will refuse to concede any fault, but we can’t let the bad decisions of these people rule our lives. Fulfill your contracts, pay your debts.

  • avatar
    Landcrusher

    This issue is a great example for various factions on both sides of the aisle. For us who vote Republican, the lesson is that total lack of regulation does not lead to a free market.

    A market where people accept these kinds of terms is not free. It’s not serving its purpose of setting prices and sending money and effort towards its best use. It is communicating to us that there is a vast divergence of knowledge and judgement, but that’s not a market’s function. Economics loses out to our ideology, but often ignore the dissonance. People don’t always make rational economic decisions, and people often choose to maximize their own profit at the expense of the public.

    For those who vote Democrat, it’s a lesson on the limits of regulation and the importance of getting it right. There are a bazillion pages of banking regulation and this behavior is still practiced legally and illegally. Just passing a law serves no one. The right laws must be passed, and they need to be shaped to punish the bad actors not harass the good.

    Lastly, if you are concerned about divergence of income, you have to ask how taxation and redistribution will help if folks on the bottom of the income wrung act like this. The limits of government have been reached. Everyone needs to wake up and smell the failure of stale government social engineering. Successful, knowledgeable, and stable people paying taxes to an unresponsive government and expecting things to get fixed isn’t ever going to work. Sending checks to charities is only marginally better. Hiring and teaching people, and sometimes crossing the line of getting into others private business is what’s really needed. It’s far from perfect, but it’s got to be better than what we got.

    Teach the neighbors cross town to fish, or dutifully ensure your charities are doing it. Get your pols to get out of the way.

  • avatar
    SMIA1948

    Why look to the government to solve a problem by force when you can solve it yourselves and make money at the same time?

    All of you that think that the Title Pawn guys in Clayton County are charging too much for loans, get together and open up your own loan operation. Charge people what you think they should be charged. You’ll soon drive all of those loan sharks out of business. And, if what you believe about the costs of the business are true, you’ll make a tidy profit doing so.

    • 0 avatar
      Steven Lang

      Great thought in theory.

      Unfortunately it isn’t as simple in practice. Let me give you an example.

      Most cities and counties usually have a simple, straightforward process of approving a business. You find a property with the right zoning. Agree to rent/buy property on the condition that you can operate the business on it. Go to city hall to get your business license, and then begin your work.

      The title lending business is forced to operate in the exact opposite manner in many of the metropolitan areas that allow them.

      You first have to sign the rental contract AND already make payments on the property you wish to use for the title lending business before getting approval from the county or city.

      Then you have to petition the city council for approval of this business. This can take anywhere from six months to two years. In the meantime, nearby businesses (often times in a similar vocation) and citizens will relay their concerns to the city council.

      This will cause the inevitable tabling of these issues. As a result, many of these aspiring businesses will have to hire legal experts and consultants whose compensation can easily run in the five figures.

      In the end, you dig up a $30k to $50 hole which may or may not ever have the opportunity to be filled in. The free market that some like to pontificate about becomes strangled, and the avenues for lending become advantageous for the established interests in that territory.

      What you wind up with is the financial equivalent of gang territory where the politicos that be get paid for their continued patronage to the established interests.

      Hope this helps…

      • 0 avatar
        corntrollio

        Yes, that’s exactly right. That’s why the best way to get into certain highly regulated businesses (e.g. used car dealers, alcohol establishments) is to buy an existing business. Sometimes the municipality will formally (by law) or informally (by custom) cap the amounts of certain types of business.

        This has lead to informal exchanges for buying/selling these licenses or approvals in some cases, for example, for liquor licenses in certain municipalities.

      • 0 avatar
        Toad

        I thought that the point of the article was that there is a multitude of title pawn business with almost no regulation. The profits are obscene and customers are lined up at the doors.

        Based on the above SMAI1948 argues that those who don’t like the status quo should open competing title pawn shops that are more consumer friendly. The market should be ready for title pawn shops with lower costs and better service. That’s how retail generally works.

        Steve then argues that now the market is both saturated and impenetrable.

        Which is it?

  • avatar
    George B

    The specific issue of title pawn loans is they are a very bad deal for the consumer if they let the interest compound over a long time. Prohibit legal high-interest loans and even worse illegal loan sharks fill the need. I could see state regulations to require the terms of the loan to be shown in an extremely easy to understand format along with loan terms that fit the short-term outlook of the people borrowing the money. If I understand Steve’s business, his BHPH lot does things like collect smaller payments every week or two instead of monthly payments. Maybe title pawn loans need to have weekly repayment and a receipt with each payment showing the new balance and remaining payments. I could see some regulation that limits loan terms so that payments are sufficient to make the balance owed each month decrease.

  • avatar
    Kendahl

    Apparently, Georgia doesn’t have an applicable usury law. Although these guys perform a useful function as lenders of last resort, there comes a point at which a bad loan is worse than no loan.

    It’s not just the poor and ill educated that get themselves into financial jams. The college educated, professionally employed daughter of a colleague ran up $40k in credit card debt. In time, she confessed her predicament to her parents who had the money to rescue her. They got the card company to reduce its demands by pointing out that their combination of interest rate and penalties violated the state’s usury law.

    • 0 avatar
      corntrollio

      “They got the card company to reduce its demands by pointing out that their combination of interest rate and penalties violated the state’s usury law.”

      That wouldn’t usually do it. Usually most of the credit card companies are based in Delaware, Nevada, South Dakota, or other states without usury laws. They aren’t subject to local usury laws under the Supreme Court case Marquette National Bank.

      They might have made that threat, but it’s more likely that the credit card company settled with them for a lower amount or lowered the penalties when they figured out these guys weren’t random schlubs.

  • avatar
    Type57SC

    20 to 30% annual interest should be the max allowable by any lending company, be it mortgages, cars, credit cards or shops like these. The law should have teeth (criminal charge component). It should be nation-wide.

    • 0 avatar
      danio3834

      The problem with regulating interest rates is people who need credit but don’t “qualify” for the higher risk of a lower mandated interest rate will turn to someone who will still lend them money, loan sharks.

      Personally, if I were between a rock and a hard place, I’d rather lose my car than my kneecaps.

    • 0 avatar
      ihatetrees

      What? The Federal Government, whose regulators are as pure as rainbows and unicorns, will lead us to a loan utopia? Sure.

      The examples of Enron, the housing bubble, and the bailout idiocy make me skeptical. If the feds regulated Title Pawn Loans, my guess is that they would take decision making away from state that do a better job regulating. True blue states like NY or VT would NOT want their laws watered down by a even a Dem Congress.

      We have too many federal statutes. This should be a state function. States, with differing statues, allow comparison AND competition. Furthermore, they limit the damage of bad laws to those states.

  • avatar
    djoelt1

    While huffily condemning bad decision making of the poor, please remember that a bad decision while walking a tightrope has a lot more consequences than a bad decision while walking on a broad road.

    A poor person chooses a repair shop to fix a water leak in their car, the mechanic takes advantage of their lack of knowledge, and they owe $900 instead of $300. Car goes to title pawn to pay.

    A person making $50,000 makes the same mistake and…nothing. No harm done.

    The margin for error at low income levels is zero. The margin for error at higher levels of income is in the hundreds of dollars. Imagine trying to spend your money, and make decisions about purchases, and plan all your time, with zero slipups. Zero! I don’t like wasting money and am very careful, but when I paid $$.08 less on my credit card bill accidently and started getting charged interest, I called and had the interest removed. Poor person would be in a death spiral with the same mistake.

    • 0 avatar
      geeber

      The problem is that most people aren’t poor (or in perpetual financial distress) because they paid $900 for a $300 car repair.

      They are poor because they have children that they cannot afford. Government programs help their children avoid starvation and freezing to death, but, in the long run, they become a trap. The programs subsidize bad behavior and insulate the recipient from its effects.

      They are poor because they would rather pay a triple-digit cable television bill every month than spend money on a book or a cultural event.

      They are poor because they view school as a taxpayer-financed babysitting service instead of a way for their childrent to improve their lot in life.

      Do people get cheated on their car repairs with distressing frequency?

      Yes.

      Does this hurt a poor person more than a middle-class or upper-middle-class person?

      Absolutely.

      Does this explain why most people are poor, or why people turn to title pawn services?

      No.

      • 0 avatar
        danio3834

        I agree with geeber. When I was in College and technically povertous, that water leak would have gone unfixed.

        In the car repair business, the customer is required to sign the work order to authorize the work based on an estimate. The customer would have needed to approve the diagnosis or repair, or they are not liable for it.

        The vast majority of shops actually end up being the victim in these cases because even when customers agree to have the work done, when they see the bill they’ll often refuse to pay.

        Putting a lien on the title of some crap heap often isn’t worth it for the shop because of the time and effort involved. In the car repair business, really any business, the customer has the upper hand.

      • 0 avatar

        People of all stripes make bad decisions. The margin of error for a poor person making a bad decision is razor thin and once that person screws up, they get screwed for their troubles. This affects the family of four that’s one paycheck away from homelessness as much as the clowns who’d rather earn “street cred” by pimping their rides with what little cash they earn.

        As for the triple-digit cable television bill? I’ll lay the blame squarely at the wingtips of the execs at Comcast, Knology, etc.

  • avatar
    Chocolatedeath

    “Yet we all are exactly the sorts who could afford to have children and raise them properly, send them to good schools, etc. ”
    WTF????? Are you serious.

  • avatar
    Chocolatedeath

    “but that these people now depend largely on credit, instead of having a reasonable job, ”
    WTF is reasonable???

  • avatar
    EchoChamberJDM

    Title Pawns are simply representative of the decline of a once great middle class in America. Take out the title pawn businesses, and something else worse will take its place…like Lease Here Pay Here. Anyone out there read “Coming Apart” by Charles Murray? Controversial book, but it hits it on the nose. It sucks to be poor in America. And its rapidly starting to suck to be middle class…..where have we gone as a country? Most feel the deck is stacked against them, so why even try?

  • avatar
    Ciriya.com

    good article, but the comments are turning into a Mitt Romney fundraiser. why do I now have to scroll through 20 pages of racist code language from the worst and dullest of the Best and Brightest?

    • 0 avatar
      Landcrusher

      You can’t be serious. First, you didn’t have to scroll through anything, you chose to do so. Second, the whole code language thing is ridiculous.

      You accuse someone of using racist code language, they accuse you of using alien code language and of being possessed by aliens. The only way to tell the two of you apart is that your conical hat is paper, and his is tinfoil.

    • 0 avatar
      danio3834

      Racist code language? You see what you want to see.

  • avatar
    oldyak

    This is too depressing.
    I`m going to bed.

  • avatar
    rumpel

    Nothing against title pawn, but 187.5% interest per year? Where I am from that’s called usurious interest.
    Can’t believe that’s legal in a developed country in 2013.

  • avatar
    ShoogyBee

    An excellent and eye-opening article. Have things improved somewhat in Clayton County since this article was first written?

    BTW this article reminded me of one that I read on huffpost a few months ago. “Unemployment Problem Includes Public Transportation That Separates Poor From Jobs” by Peter Goodman – http://www.huffingtonpost.com/2012/07/11/unemployment-problem-public-transportation_n_1660344.html

  • avatar
    Don Mynack

    How is this different from any pawn shop? They function the same way with other consumer items, but with cars it’s somehow different?

    • 0 avatar
      Steven Lang

      Good question.

      1) When you receive a title loan, the collateral you leave is a lien on the title. Not the vehicle itself.

      As a consequence the title pawn needs to encumber the cost of recovering your vehicle if your loan goes into default. That cost is usually in the neighborhood of $200 to $500. A pawn shop simply keeps and eventually sells the merchandise that you pawn.

      * Motorcycles are a different story. They are left at the title pawn and typically put in a back room. Motorcycles are far more difficult to repossess and, more times than not,

      2) The amount loaned is often times five to seven times greater with a title pawn.

      What you rarely see on shows like Pawn Stars and Hardcore Pawn is that the pawn shop is primarily interested in sizing up their customer. They want to figure out if the person in front of them will make good on the loan. The property is important as well. But it comes second to the qualities of the person seeking the loan.

      The personal issue is about ten times more important to the title pawn because the quality of the merchandise that is brought to their door is more often than not, pure crap.

      A lot of the vehicles that get pawned are worth more for their parts than as a whole. That means the title pawn is far more reliant on the quality of their customers than a pawn shop.

      3) Collections. They are quite important for the pawn shop. Deathly critical for the title pawn.

      Title pawns will call their late customers as much as possible, as early as possible, and as relentlessly as possible. If you don’t come back and pay at least a little bit, the repo truck is simply a phone call away.

      In a pawn shop the lenders can immediately sell your merchandise and make a profit. Title pawns have to start spending money in order to make their money back. They have to hire a repo firm. Call in a locksmith if the vehicle needs a chip key. Mail out paperwork, and get the vehicle ready for either an auction or a retail buyer.


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