Cash-strapped Nanaimo residents are turning to pawnbrokers to help settle holiday debts; sometimes giving up Christmas gifts as collateral.
Pawn shops are seeing a 20% jump in sales and pawns this January as people look to make extra cash.
According to store owners, it isn't unusual to see an upswing in customers after the holidays, but reality TV shows and increasing household debt seems to have made pawning more popular. People are seeking emergency loans, at times using gifts as collateral. Presents are also being exchanged for cash.
Alayna Gjelsten, part-owner of Nanaimo's Stock Exchangers, says people don't always get gift receipts on unwanted presents, so they sell it to pawn shops. She has also noticed an increase in people placing loans against jewelry, tools and electronics, like smart phones, to pay holiday bills. One customer pawned his new tools for a $250 loan on Tuesday; another received a $2,000 loan on his all-terrain vehicle.
"People tend to overspend this time of year, and need cash to pay the bills," Gjelsten said. "And we are a great means to get it. People can get their items back after 30 days if they repay the loan with interest and if they don't, we sell it. It doesn't appear on their credit history."
Canadians are continuing to wade into debt, and with more T.V. reality shows like Pawn Stars making an appearance, they are learning how to settle bills through local shops.
According to the Canada Mortgage and Housing Corporation's 2011 observer report, mortgages comprise about 68% of Canadians' total debt while consumer debt, including credit-card spending, makes up the other 32%. The organization called debt in the country a "serious issue," with Canadians currently owing about $1.50 for every dollar they earn.
Jennifer Belfry, with Nanaimo's Smythe Ratcliffe debt advisors, said the cost of housing is so expensive there isn't much money left over for other purchases. People turn to credit, especially during Christmas when there's pressure to have presents under the tree.
Scott Hannah, president of the Credit Counselling Society, says the new year is usually a wake up call for people as they reflect back on the last 12 months. This is the time when people vow to improve their financial circumstances, beginning with paying off bills and creating budgets, he said, adding the society usually sees the number of clients increase by 30% after the holidays.
People needing fast solutions are turning to pawn shops, which have reported a 20% increase in pawns and sales so far this season.
Stephen Montpetit said they saw people come in after Dec. 25 looking to convert gifts into cash so they can get by until the end of the month or continue to celebrate. Pawns are also up. Many people new to pawning have learned how it works from reality television and are willing to give it a try, he said.
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