For those not acquainted with pawn shops, they make money by giving short term loans of one to three months to customers based on the items they put up for collateral such as jewelery, electronics, musical instruments, hand tools... Loans are steep, usually asking 10-20% service fees monthly making them pricier than bank loans or credit cards, and if the fee isn't meet, they can sell the item. A 10-20% fee translates into an annual percentage rate exceeding 300%.
When we talk about financial reform that means extremely high interest-rate charges like those charged by pawn shops could ultimately be subject to federal limits. To Pawn America a 9.5 percent service fee for two weeks works out to be an annual percentage rate higher than 200 percent. Not bad for a few minutes of work! It is also the reason Pawn America contributes to John Kline's campaign.
Isn't it past time to tell Kline he works for us and not Pawn America?