Los Angeles Pawn Shops

Los Angeles pawn shops, like every other pawn shop in the United States, have become a source of payday loans.  The business of payday loans has exploded in the last few years, and pawn shops are set on profiting from this growing industry.  The problem is, many feel that payday loans are no better legally than borrowing from a loan shark.

One issue found with the payday loans industry is that loans are not used on a one-time emergency basis as originally intended.  Extensions are offered by way of paying additional fees several times over, meaning that the initial loan, sometimes as little as $100, ends up costing the borrower twice the loan amount.  If the borrower is in need of a payday loan, he or she should be certain that the loan will be repaid within the initial time set forth.

Another questionable practice is the high interest rates charged for payday loans.  California banks charge a much lower interest rate and do not have the high default rate on loans (less than 3% in 1996-97) that are cited by pawn shops and payday lenders.  Therefore, the risk Los Angleles pawn shops claim to take in offering these loans is not nearly as great as imagined.  Studies also show that 70-80% of all payday loans are repaid anyway.

Also, in the state of California, payday loans are not regulated as strictly as they are in many states.  Los Angeles pawn shops are not monitored, audited, or limited in the charges they can apply to their payday loans.  It is much safer (and probably cheaper) to utilize a regulated finance lender if you live in Los Angeles.

Also beware of any agreement that requires the use of a post-dated check.  It is entirely possible that the payday lender will deposit the check prior to the agreed upon date, causing the check to bounce and leading to a whole new set of problems.

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