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Struggling Families Seek Pawnbrokers for Salvation

|Includes: eBay Inc. (EBAY)

At a time not too long ago, pawn shops seemed like an ideal place to discharge unwanted items for a small amount; Something to give you that little extra cash in your wallet. Of course with the emergence of the Internet, the concept of a pawn shop has taken a new meaning through, eBay (Public, NASDAQ:EBAY). Many users have joined the online craze for buying and selling, all the while their disposable income has decreased on aggregate. However, during the recent lack of job opportunities and rising personal debts, the resurgence in business for pawnbrokers has skyrocketed.

So what exactly is a pawnbroker?


A pawnbroker (or pawnshop) is an individual or business that offers monetary loans in exchange for an item of value that is given to the pawn broker. The word pawn is derived from the Latin pignus, for pledge, and the items having been pawned to the broker are themselves called pledges or pawns, or simply the collateral.

In the last 6 months of 2008, pawnbrokers Albemarle and Bond’s profits have increased from £24.9 ($36.89 USD) million to £26.5 ($39.27 USD) million. This represents an increase in pre-tax profits of 19%. Cash Converters also exceeded market expectations with an 120% increase in half-yearly profits of £466,000 ($690,564 USD). Pawnbrokers are one of the few high street shops that aren’t concerned about insolvency.

H&T Group also posted a 36.5% increase in pre-tax profits. This growth was h... growing customer base, the rising price of gold and an expansion in the number of shops.

You now have “insufficient funds” is probably the worst feeling in the world when you slide your bank card in – No one wants to be a victim of this evil message, however more and more people are being haunted by it everyday. Consumers that have had loan or credit card applications rejected regularly turn to pawnbroker loans to help them with short term money problems.

Unfortunately, many people who use high interest loans from pawnbrokers and payday loans will find it is very easy to get into a cycle of dependency. While these loans should only be used in an emergency, an increasing amount of individuals that can’t get access to personal loans may find themselves now turning to loans from pawnbrokers, as banks continue to be cautious with lending.

Best advice I can give you?

If you are looking for long-term gains which are 100% guarantee, put your money in Cash Converters International Limited (Public, ASX:CCV) and eBay Inc. (Public, NASDAQ:EBAY). Let it sit for three years, forget about it, and return to a nice small fortune.