Information for Pawnshop Owners
If you're a pawnshop owner, a new bill proposed by Senator Durbin (D-IL)
threatens to put your pawnshop out of business.
How will bill S. 500 put my pawnshop out of business?
Bill S. 500 calls for a maximum annual interest rate cap of 36%, INCLUDING
ALL INTEREST AND FEES. Let's quickly do the math:
If you make a loan for $100, and your client repays the loan in 20 days, the MAXIMUM amount
you will be allowed to charge for the loan is $2.00, including all interest and fees.
Unfortunately, the cost to process the loan, including employee time, storage space, reporting
costs, accounting costs, retail space, utilities, etc., needed to service that loan costs
MUCH more than $2.00.
| Maximum annual interest rate: | 36% |
| Loan Amount: | $100.00 |
| Max Interest Charged Per Day (($100 x 36%)/365): | $0.10 |
| Total Charge if Client Repays Loan in 20 Days: | $2.00 |
Why was bill S. 500 proposed?
The main reason bill S. 500 was proposed (that isn't politically motivated) was to curb
abusive payday lending practices. Unfortunately, because bill S. 500 doesn't
distinguish between different types of loans, pawnshops will also be wiped out of existence.
Is there anything I can do to stop bill S. 500?
Yes, there are several things you can do to help stop this bill from passing:
- Print a petition and put it in your store for customers to sign:
We've provided the petition. When customers come in, let them know that your shop may soon be out of business and ask them to sign it. Click here to print the petition. - Contact your congressmen, governor, mayor, media, etc.:
Tell anyone who will listen about what's going on and how it will affect you and your customers. Ask your customers to contact the local media and complain. Click here for information about contacting your local government officials. Click here for information about contacting the media. - Get creative and make your voice heard:
There are various different ways to make your voice heard. Don't be silent, and don't sit around waiting for someone else to help. The senator proposing this bill is VERY powerful and has the backing of the president. You need to do something NOW before it's too late!
