Pawnshop operator Cash America said it is acquiring all of rival PawnMart’s locations in metro Atlanta, nearly tripling its size locally to 48 stores.
The deal comes as pawnshops across the country are seeing an increase in business, an indication that consumers who may have trouble getting loans and credit at traditional financial institutions are turning pawnbrokers.
According to the National Pawnbrokers Association, the majority of members in a 2013 trend survey reported a 10 percent increase in loans made since last year, with the average loan amount remaining at $150. The group said customers tend to borrow only what they need, and 85 percent of loans are repaid.
Cash America, which has 17 metro shops, will acquire Norcross-based PawnMarts’ 31 local pawnshops and three additional stores in North Carolina in a cash deal valued at $62 million.
PawnMart Chief Executive Officer Tom Haas said the company’s board decided it was the right time to sell and Cash America, which he called a “very good competitor,” is the right fit.
Haas, who joined the company in 2006, said that while many pawnshop customers are repeaters, he is seeing a broader group of clientele.
“Banks in many cases have gotten so restrictive on their borrowing that we’ve become an alternative,” Haas said. “What we’ve seen in the last maybe three years is that people in upper socio-economic groups are starting to come into pawnshops.”
Pawnshops accept valuables, or collateral, in exchange for short-term, interest-bearing loans. After a transaction, the borrower receives a ticket that includes terms of the loan. Interest rates on loans can be as low as 8.99 percent to 25 percent a month, Haas said.
According to the state Office of Insurance and Safety Fire Commissioner, there is no Georgia agency that regulates pawnbrokers, although local municipalities may regulate them.
In July, for example, the Cobb Board of Commissioners passed an ordinance that requires pawnshops and jewelry stores to give police access to customer fingerprints, photos of customers and inventory, and other information that may help them in tracking down stolen property suspects. The fingerprints and photos are to be included in a new database that authorities can access.
Pawnshops also are governed by major federal laws that apply to financial institutions, including the Truth in Lending Act and the Equal Credit Opportunity Act.
Cash America said PawnMart, which has 277 employees, had combined loan balances of $10.7 million as of Dec. 31, 2012. The deal is expected to close in the fourth quarter. Haas said he will remain with the company through the transition.
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