Economy helps scrap yards, pawn and resale shops; payday loan places struggle

Monday June 09, 2008,

Tough economic times in mid-Michigan have resulted in benefits for Saginaw resale shops and scrap yards but struggles for payday loan businesses.

High gasoline prices coupled with the economic downturn are leading people to sell items big and small to Saginaw pawnshops.

"We hear it every day," said Saginaw resident Steve P. Naylor, 37, the owner of West Side Discount, 1014 Gratiot in Saginaw. "Just to pay for gas, people are selling back everything from jewelry to tools."

AAA's national daily fuel gauge report shows that the Saginaw-Bay City average for last week was $4.06 per gallon, up from $3.45 a year ago. Two weeks ago, gas was as high as $4.18 along the Interstate 75 corridor in Saginaw County.

And it isn't just about gas.

"Everything's going up but wages," Naylor said. "A lady came in the other day to get $300 to $400 to pay (a utility bill)."

Naylor said the woman later called and thanked him for his help.

Joe A. Beaudry, 43, owns Stretch-A-Buck's Discount and Jewelry Sales, 250 W. Genesee in Saginaw. The Flushing resident agrees that gas prices have become a concern for many of his patrons, though he questions if gasoline is the only thing fueling business.

"People do come in and say, 'I've got to have gas money to make it to work this week,' " he said. "But there will always be people who can't make enough money as they need, and gas is the latest excuse."

High gold prices are prompting people to sell jewelry to pawnbrokers, as well, Beaudry said. Friday June 6 morning, gold was trading around $900 an ounce, more than double the 2003 price of $350 per ounce.

No checks to advance

But while a sour economy can pay dividends from some businesses, others feel the pinch.

The cash advance industry over the past year is on the decline, said Steve Leach, the chief executive officer of Grand Rapids-based Instant Cash Advance Corp. Instant Cash Advance has a Saginaw Township location at 3037 Bay Plaza.

"We suspect the stimulus checks are helping people," he said.

Another possible reason: the state's unemployment rate, which in April hit 6.9 percent.

"It's tough to be in the payday (loans) business because unemployment is high," Leach said. "We can't underwrite this clientele, because they don't have income (to pay the loan back)."