Tuesday, May 17, 2022

Pawn shops see business boom as ‘Jan-worry’ kicks-in

Pawnshop operators are optimistic of generating unprecedented proceeds this month as most city dwellers tend to be desperate to recover financially from the festive season.

Pawnshop business has been in operation for less than three weeks since the arrival of the New Year but customer turn out has multiplied compared to other months.

Managing Director of Pula Pawnshop David Makgatso says the month of January has proven to be their traditional pick up, adding that their target market has always been small medium enterprises (smme’s) as they come looking for money to buy stock.

“January is traditionally our pick up time and we rely more on smme’s but here and there we have individuals coming in to look for financial assistance to patch up,”

“As you know the past two years has been a challenging one owing to Covid-19 but most people we have been assisting are the ones looking at supplying or buying stock for their small businesses but the volumes went down,” said Makgatso.

He further said despite an expected huge turnout of clients this month, they are still encountering certain challenges such as failure by clients to service their loans.

He also said as a result, they have become cautious when issuing loans to avoid instances of loan defaulters.

“This time instead of giving a client an excessive loan we try by all means to lower it so that paying back the loan does not overwhelm them,”

“We not only issue out loans but in most cases we offer advice because we have realized that a lot of people are living beyond their means,” added Makgatso.

He stated that even though the regulation of pawnshop business is currently running on exemptions, there are concerns of fly by night pawnshop operators.

For his part, Manager of Thobela Pawnshop Eric Molotlhanyi said January has proven to be a month in which people are looking for loans compared to December where people come looking for items to buy.

“We often give clients a period of 30 days during this time to pawn their items and have a loan based on the value of their item,”

“After the lapsing of 30 days period, that is when we decide to sell the item to a different person but then again we often advise our clients against taking excessive loans so that they do not lose their valuables,” said Molotlhanyi.

He said since the beginning of this year, they have started seeing an increased volume of clients.

Molotlhanyi further said even though the business has picked during this time, there are a series of challenges affecting their daily business operations.

He said their pawn and drive policy in which the business lends a client a loan against their vehicle and still allow a client to drive it has proven to be costly to the business.

“We have started realizing that pawning a vehicle and allowing the owner to continue driving it has now resulted in some selling those vehicles, while in some instances the vehicle gets damaged and therefore losing the value upon which we agreed on,”

“We end up incurring more costs which were not catered for so the risks of pawn and drive it are high because we only used to pawn and park the vehicle,” added Molotlhanyi.

He also said another challenge is that since Covid-19, more clients are failing to pay, adding that in this case the business is forced to understand even though there are bills to pay.

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