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 Business News | January 2007 
Pawn Stores Clean up During Holiday Season
 El Universal
| | Over 80 percent of items pawned are either watches or jewelry, while the rest is electrical goods, furniture and vehicles. |
According to José Alberto Gómez Rodríguez, director of the pawn-store chain Rafael Dondé, hundreds of customers will be unable to pay off their outstanding debts on items pawned during the holiday season.
Gómez attributes the situation to stifling high interest rates and pressure on the public to spend during Christmas and Three Kings Day on Jan 6., the latter being the traditional day to give presents to children.
The director describes the pawn-store industry as underhanded, with stores aiming to lend as little as possible while charging extremely high interest rates.
The picture gets even murkier when merchandise quotas have already been agreed to between jewelry shops and pawn stores before the start of the holidays.
"There´s an understanding between well-known jewelry shops and pawn stores to hand over as many precious metals as possible which are then melted down to create new jewelry," he said.
Due to the lack of gold in Mexico, the jewelry industry survives in part by recycling a lot of items.
Gómez figures that up to 60 percent of customers will be unable to pay off their debts. He adds that while stores are meant to pay out 70 percent on the value of an item they usually end up giving only 40 percent.
GOV´T AGENCY
The National Commission for the Protection and Defense of the Users of Financial Services, better known by its Spanish acronym Condusef, has produced a list of pawn stores with the lowest rates of interest. They are: Nacional Monte de Piedad, which charges an annual rate of 48 percent; Luz Savińón with 70.8 percent; and Rafael Dondé with 82.8 percent.
Over 80 percent of items pawned are either watches or jewelry, while the rest is electrical goods, furniture and vehicles. |
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