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Payday lenders would probably (thankfully) go away, but other businesses could benefit. Credit Card issuers will do well. Interest rates go down, but credit lim
by WillPostForFood 10y ago
Payday lenders would probably (thankfully) go away, but other businesses could benefit. Credit Card issuers will do well. Interest rates go down, but credit limits can go up. A pawn shop makes money selling stuff, so if there was more money in the neighborhood, they could sell more. They may need to acquire products in new ways, and rebrand as an antique store, or general store.
- ashark 10y agoUnless I've misunderstood all these years how pawn shops work, they would indeed have trouble operating under the same business model as average wealth in their area increased. Resale shops and such would be fine, but the difference is that they don't sell stuff they've acquired when people defaulted on what amount to short-term secured loans.
- WillPostForFood 10y agoYes, they'd have to change their product acquisition methods, but at their core they are basically used goods resellers, and that can work just as well as a wealth increases.
- ashark 10y agoRight, but then they're not a pawn shop. Payday loan places would do fine, too, if they turned into traditional banks.
- WillPostForFood 10y agoIt's a much bigger step for a payday loan business to turn into a bank (basically impossible due to regulatory barriers to becoming a bank), than for a pawn shop to switch suppliers. Look at it this way, when people move out of poverty, their need for payday loans goes down, but their ability to buy stuff goes up, so a pawn shop has some potential to capture the increased purchases.