Pawnshop's Argumentative Essay: Pawn Shops

Last weekend I witnessed a most unusual sight. I pulled into the parking lot of a small strip mall in Northern Arizona. I was on a mission to pick up some needed essentials for dinner. As I got out of my car I noticed people parked in the Ford Explorer right next to me. They were pulling boxes and a nice looking guitar out of their car. They then carried these items into one of the stores.

How strange.

I 'm used to people carrying boxes out of a store, but not into a store. What really boggled my mind was the steady stream of other individuals. The people parked right next to me weren 't the only ones. I noticed 3 other people doing the same exact thing.

Returning unwanted items?

I quickly realized that these people weren 't

Providing a valuable service.

People in need of short term loans often use pawnshops. It allows individuals to leverage assets and get much needed spending capital. Now, pawning items is not their only business. These pawn shops have a number of ways to profit . . . but more on that in a minute.

This isn 't your father 's pawn shop anymore.

Pawn shops used to have a bad reputation. Now these once seedy shops have become legitimate means of financing for many individuals. The business is run by national companies who own hundreds of stores. They provide safe and clean environments, and locate stores in good neighborhoods. Some high powered image consultant is truly working wonders.

But that 's not all.

Pawn shops are not just focused on pawning items. Now they offer a number of other services including short term personal loans, paycheck advances, and lending against automobiles. This allows pawn shops to expand their product offerings and diversify their revenue.

For pawn shops, recessions are a good thing. Money 's hard to come by, and credit standards are tightening. This is when pawn shops do more business. And more business means more

Some state governments are working to limit the amount of interest that can be charged on payday loans. Democratic presidential nominee Senator Obama has even proposed a nationwide limit on interest for payday loans.

This has scared many people out of the stocks recently. The threat of regulation could limit growth rates. I agree but have a different view on things. What everyone needs to realize is payday loans are only one part of the pawn shop business. Would regulation hurt? Of course, but it won 't bankrupt these companies.

And another thing.

Pawn shops are already highly regulated. Yet they survive and thrive. If the government were to regulate another part of their business I have no doubt that these companies will adapt. They 'll develop profitable business models working with any new regulation . . . if and when it arrives.

The big three of pawn shops.

The industry has three big players, Cash America (CSH), EZcorp (EZPW), and Fist Cash Financial (FCFS). All three companies have a significant presence in the United States. EZcorp and First Cash have expanded into Mexico. And Cash America and First Cash are active in