Payday lending trap: Desperate times drive many to seek a quick fix

WEST JORDAN — If you're a finish carpenter and there hasn't been anything to finish, or even start, for the last 18 months, waiting at a local pawn shop can feel like the end of the line.

"Maybe it's because I've always said I wouldn't be caught dead in one of these places," said the 40-something guy who stood holding a black and orange bag of power tools. "It's the first real sunny day, and I should be out there using these, but … Anyway, I never thought I'd be here, let's leave it at that," he said, adding that his name is nobody's business. "Call me John Deere, like it says on my hat."

The guy was obviously no stranger to work: He had forearms like Popeye's and hands as big as catcher's gloves.

"I guess it's like that song says, we don't make things here anymore, so we're not making it here anymore," he said turning to the business of selling off his Rigid R840011 drill and Ryobi laser circular saw. "Not the best tools in the world, but they always did what I had to do."

What he needed them to do Monday was to help bridge an income gap between his next job and the ones that haven't panned out.

"I'll be back for them," he said to the clerk, twice, before leaving.

"They'll be here," the clerk said. "I wish we could have done better than 60 bucks. But we've got so many tools right now; not as many as we have had, so maybe things are loosening up out there for these guys."

It's one thing to give somebody a few dollars for a stack of DVDs or few hundred on some jewelry, a pawn shop owner in downtown Salt Lake said last week. "When it's somebody's tools of their trade, well, you know it's somebody who would really rather not be one of our customers."

Selling or pawning something is a desperate act that might get you by for a month, but it comes at a bigger price than wounded pride. The interest rate on a loan, whether it's for tools for a couple weeks or that old guitar or as an advance on a paycheck run 10 times the rate charged by credit unions and banks, according to the state Division of Consumer Protection, which advises in so many words "let the borrower beware."

That's the bottom line in a new report by the Center for Responsible Lending (www.responsiblelending.org/payday-lending/). People, 91 percent of them, anyway, who go in for a one-time, never-going-to-happen-again, two-week loan end up coming back five more times over the course of a year, according to the report.

The center calls it a "debt trap," and it's a reliable revenue stream for lenders.