Can't pay for power? Try pawn shops, high-interest payday loans

By Nina Wu Of The Examiner Staff

Last week, a man came in and plunked a 14-karat gold ring on the counter of Midtown Loan Office on Sixth Street in exchange for $140 to help pay for his Pacific Gas & Electric bills.

"He said the same thing everyone's been saying," said Midtown owner David Kazanjian. "The bills have doubled and tripled."

After months of outrageously high PG&E bills, not to mention high rents and increasing water costs, San Franciscans are looking to borrow some quick cash. In moments of desperation, the neighborhood pawnshop and payday loan centers are places where people can get short-term loans to pay their bills.

Though the state announced that electricity prices last week fell to $50 per megawatt hour -- compared to more than $500 per megawatt hour in recent months -- consumers have no way of knowing if they have seen the last of exorbitant bills. Some are hunkering down for a long, hard summer.

Pawnshops, clustered in the poorer parts of town, have long served as economic indicators, said Ralph Kazanjian, who is David's uncle.

The elder Kazanjian has been in the family business since 1952 and has seen several recessions. In the past six months, he has noticed more people pawning sundry items, which include TV sets, electronic equipment, jewelry and guitars.

"I serve a need because the people who deal with me can't go to ordinary places and borrow money," he said.

A pawned item can be worth anywhere from $1 for an old screwdriver to $50,000 for a piece of jewelry. All items are subject to a sliding interest rate set by the state. That rate ranges from 1 percent to 2.5 percent. After four months, the shop informs the customer that the item will go up for sale if the shop does not hear a response in 10 days.

Most people who pawn their belongings just need a little cash to help them get through the week until the next paycheck, said Scott Kaplan, owner of Mission District Pawnbroker. More than 90 percent of their customers return to retrieve their items, he said.

On a recent weekday afternoon, a constant stream of people lined up at the shop's counter. Many were day laborers and working-class folks.

Guitars of all shapes and sizes hung from the shop's ceiling, along with leather jackets, tambourines and ukuleles. The glass counter displayed gold rings, watches and electronic gadgets. Fishing poles sat in one corner, along with vintage sewing machines and accordions, which are popular with mariachi bands.

Sitting in the storage room, said Scott's father, Darryl Kaplan, are about 500 television sets and 600 VCRs.

"When times get tough, people trade in items they don't necessarily need for cash," he said. "These are all the extras."

Another option for the cash strapped is the payday loan center, which offers cash advanced in exchange for a paycheck stub.

But loan centers are spiraling debt traps with extremely high interest rates, said Consumers Union spokeswoman Shelley Curran.

Someone who borrows $300 in December could owe 15 percent -- or $45 -- every two weeks in addition to the principal amount. In other words, they will have to pay twice the amount borrowed during the year.

"The industry doesn't allow people to make partial payments, unlike other forms of credit," Curran said. "I would recommend a cash advance on a credit card before taking a payday loan."

She also recommends people who are struggling with their bills to call their utility provider to negotiate a payment plan rather than go to a payday loan center.

PG&E and some nonprofit groups offer subsidies to low-income families.

But if those options don't work, there is always the local pawnshop -- Darryl Kaplan calls it "the poor man's bank" -- with fewer restrictions and no questions asked.

Kaplan says talking with the people who visit regularly is what he enjoys most about the business. He knows their names and items by heart. And he jokes with them constantly and knows their ups and downs.

"If you don't have empathy for the people you're dealing with, you're not going to be in business anymore," he said.

E-mail Nina Wu at nwu@sfexaminer.com

http://www.examiner.com/news/default.jsp?story=n.pawnshops.0611w

-- Martin Thompson (mthom1927@aol.com), June 11, 2001

Answers

Martin, how you fill the airways. You seek to desimate the full enjoyment of humans. I have seen your name, more than once, along a long highway. No matter how pompus you think you are. Stop the tricks. These are fellow beings. Lend Hope, to All. Else, I will seek you down. My Story...

-- My Story (andI@sticking.com), June 11, 2001.

Martin, I have seen your name so often on this long strange road since 2000, and I have been greatly helped and informed by all the stuff it's been attached to. Thanks, dude.

-- L. Hunter Cassells (mellyrn@castlemark-honey.com), June 12, 2001.

Here "My Story", let me lend you some hope. If you pull your head out of your ass, you can better prepare for the future. The rest is up to you.

-- Guy Daley (guydaley1@netzero.net), June 12, 2001.

My attitude is generally "just ignore the trolls, don't feed'em," but I admit I find Guy Daley's comment pretty funny indeed. Good one, guy.

Martin, ignore the trolls, keep up the good work, you know that the usual audience continues to lurk and appreciates your efforts. As always.

-- Andre Weltman (aweltman@state.pa.us), June 12, 2001.

No problem. I think Guy said it all. My story pops up every now and then and I have yet to figure out what it means.

-- Martin Thompson (mthom1927@aol.com), June 12, 2001.