Publilius Syrus (1st century BC) - an Assyrian brought as a slave to Italy, but by wit and talent won the favour of his master, who freed and educated him - once said “A small debt produces a debtor; a large one, an enemy”.
Most Australians have heard of Dun and Bradstreet. If they don’t recognise the shortened title version then they most definitely will recognise the company on viewing their full title: Dun and Bradstreet Debt Collection.
I’ve had a few letters from them in the past and I’m sure most Australians have, at some time in their adult life, had cause to take a deep breath before opening an envelope with their letterhead on it. Some debt may well have been an oversight and may have been promptly addressed, while other debt of a more serious nature may have been referred to the Credit Reference Association of Australia (CRAA).
Once your debt hits the CRAA office and your name is listed - the chances of you getting a personal loan or credit card from a bank can be severely limited. There are of course many loan sharks who are more than willing to do business with you if you have problems at your local bank. These are the operators who advertise on the radio and television with slogans such as: “If you’re out of work and have a bad credit history then you must see us for a fast personal loan”, and are prominently located in most towns throughout the nation.
I haven’t personally entered a pawnshop nor done any business with one but I know many relatives and friends who’ve parted with their prized video, watch and other portable items of value. Most say it is to tide them over with grocery money until pay day - and some I suspect are looking for a few extra dollars for entertainment or gambling purposes.
Judging by the number of people who go in and out of pawnshops it would appear there isn’t the same level of stigma attached to entering such premises as there use to be. Where once it was a “shame job” - visited only when the chances of being seen were limited; early in the morning or late in the evening - it now appears as though circumstances have changed. People of all races and professions are not the slightest bit concerned about having a public association with taking out a short term loan with a pawnshop when experiencing financial hardship.
The provision of access to an overdraft facility or increase in credit card limits - a normal course of action for people with a good relationship with the local branch manager of their bank - is sadly not an option available to those who seek out pawnshop financial agreements.
While bank loan interest repayments hover at about of 8 to 10 per cent, the pawnshop proprietors, who take higher risks with their money on unsecured loans, can afford to have higher rates attached to their repayment terms. For instance, if you took out a loan on $2,000 you would be charged at 8 per cent with an establishment fee of $350 and an additional fee of 1.8 per cent on top per month.
If you traded in an item to the value of $500 (plasma TV for example) you would incur an interest rate of 35 per cent ($675 for the first month and $911 for the second month). If the repayment on the loan isn’t paid within 90 days the pawn shop proprietors give the owner a further seven days to finalise the account or the property is surrendered to them. With this system, if you were to come up with the money to buy back your plasma TV after the 90 day period, including accrued interest the sum of $1,230 would need to be exchanged.
You might frown and be amazed at the exorbitant fees incurred by these financial entities, but they exist and continue to flourish because many members of our community are doing it tough and seek their services.
The other day I waited patiently in a long line at a service station to pay for the diesel in my SUV, when a small commotion at the front of the queue caught my attention. I observed a non-Indigenous woman with three small children searching inside her handbag for extra money to pay for the items collected from the store of the service station. There were disposable nappies, bread, milk and breakfast cereal, and from where I was standing it looked like she was going to be placed in the embarrassing position of sending one of the items back with a child to the shelf where it came from.
I immediately forced my way forward and asked the woman behind the teller what the outstanding amount was, and on hearing $7.50 I handed over a $10 note to cover that amount. The woman quickly gathered up her items and rushed, without saying a word, out of the service station with her children; probably more out of embarrassment than fear.
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