SAN DIEGO (KGTV) - People looking for some extra cash on hand during the coronavirus pandemic are turning to pawn shops as one way to make ends meet.
Moris Adato, the owner of CashCo Pawn, says business for pawn loans started to pick up near the end of April when people needed extra money for mortgage and rent payments.
"It's getting crazy right now," Adato says.
Pawn shop owners say their loans can help people make ends meet as they wait for things like EDD payments or stimulus checks or search for a new job.
When someone pawns an item, the shop owner gives them a loan against the item's cash value. People typically have 4-6 months to pay it back, with interest. Once the loan is repaid, the item is returned to the owner.
If someone can't, or chooses not to repay the loan, the item then belongs to the store and can be sold. There's no penalty for forfeiting the item, and it will not affect your credit score.
Many stores, like Adato's, will allow people to extend their loans if they ask.
Adato says his most common item is jewelry.
"Jewelry in itself is something to wear and to look good, but it's a commodity," he says. "It's gold, silver, or diamonds. If things go wrong, this is how you get out of trouble."
Experts say there are a few things people need to know before deciding to pawn a possession.
First, make sure the store you go to is accredited with a state or national pawnbrokers association. That will ensure they follow all the laws and regulations of the business.
Second, ask about the terms of the loan, especially the interest. California law caps the interest on a pawn loan at 3% per month.
Third, make sure you understand all of the extra costs, including storage and set up fees.
Despite the spike in demand, Adato says about 90% of the people who come in for loans pay them back and reclaim their items. His store is offering zero-interest on any loan paid in full within 30 days. He's also promoting safety by doing as much business as possible through his website and app.
Adato says it's a small way he can help people get by during the pandemic.
"There are still people out there that need money, unfortunately," says Adato. "These are blue-collar, working, hard class citizens that just need groceries to get through this hard time."