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Latin America Investment News on Viva Tropical

Pawn Business Booms in Mexico

Article Summary:

Faced with economic instability, rising cost of basic goods, many of Mexican families are resorting to quick cash of pawn shops. This year alone, millions of Mexicans are expected to make pawn loans, with an average pay-out of  $700 pesos per item pawned. But the industry is difficult to regulate, leading to underground pawn shops and predatory lenders, which has caught the attention of industry regulators.

Photo Credit: El Universal

Original Article Text From El Universal via Google Translate :

The commitment, Option for 10 Million People

At present more than 10 million Mexican resort to making hard cash at pawn shops. It is estimated that the average loan per person is 700 thousand pesos, with a collateral pledge.

2012 Faced with a scenario of economic instability where the prices of basic goods are rising, more complicated season starts for the pockets of Mexican families, so it is estimated that between January and March, the quest to improve its economy is a constant among the population.

In response to this need, about 6 500 pawnshops in Mexico offer their services, “so it’s really important to know how that loan will cost,” he said at a press conference Paul Girault Ruiz, of the Rafael Foundation.

Around 500 thousand pawnbrokers operate without regulation, so it is vital that there be enough information in order not to risk their property in the hands of “pirates.”

Girault said the effort is considered as a loan expensive compared to other credit instruments, but 18 million people use some form of inventory credit, because they are not subject to some form of bank credit and in most cases is more expensive because of the high bank fees.

People have a hard definition of where to go when “already in the past” and this should not be so: the effort is an event where people can make their savings liquid, he said.

“The uncertainty does not affect collateral operations, the Foundation relies on the Mexican people,” he said in an interview with Paul Girault Ruiz.

Due to security problems being experienced by the country, the pledge form depends heavily on high-cost operating expenses for the shelter of safety garments and branches.

It is estimated that by the end of 2011 the lien segment invested 10 billion pesos in safety.

Girault said foundation where is the nation’s most reliable institution, as security measures are cutting edge.

He said that they have a live monitoring center at its 401 branches and vaults where the garments are safe shelter.

Growth of 75 New Branches
Foundation where it has an expansion plan of 75 new pawn shops where investment spending is 2 million dollars for each branch.

Significantly, the final cost includes the training of appraisers, to achieve a high level of professionalism and to provide excellent service for those who need it most.

This year we expect a million 300 thousand active clients in all its branches. Paying on average 700 thousand pesos per item pawned, “55% of our customers are women,” said the institution.

It also seeks to create the Federal Pawn to create a legal framework for this activity and provide greater protection of the garments as collateral.

Link to Original Article:

From El Universal

Latin America Investment News on Viva Tropical