Pawn Shop Owners: “Loans Just SPIKED, PEOPLE ARE DESPERATE!”

Added: 2026-05-05

[00:00:00]Today, I want to talk about two major shifts that we're seeing happen in the economy that are warning signs we all need to pay attention to. The first one is going to be about how pawn shop loans are exploding, and then we're going to talk about how the surcharges for things are everywhere, guys. As if things aren't already expensive enough, you're seeing all these different surcharges being tacked on to all different sorts of bills right now, and it's getting out of hand. But, we've been talking a long time about how people are going broke.

[00:00:31]But, with this recent spike in gas prices, it has really pushed a lot of people over the edge within a relatively short period of time because pawn shops across the United States are starting to see a noticeable increase in people taking out short-term loans. And this is a direct tie-in to what we're seeing with gas prices because gas prices hit the American consumer right away, guys.

[00:00:55]As soon as gas prices go up, everybody has to pay more at the pump, which means less money left over for anything else.

[00:01:02]So, pawn shops kind of act like a real-time indicator of financial stress because you can walk into a pawn shop with a valuable item and walk out with money today. And the only other way you can do that with any sort of short-term loan is with something like a payday loan or with those loans they have now where you can borrow against your paycheck early, which people are doing as well. And the big key thing to understand here is this is not people, you know, taking out these short-term loans for discretionary spending. This is all for the purpose of being able to keep up with the cost of living and pay bills. In fact, a pawn shop owner in Idaho that they talked to specifically said that people are coming in and taking these loans in order to pay bills. That's what their customers are telling him. Same thing with a pawn shop owner in California. A lot of people are saying the gas prices are too high, we need money for gas. And nowhere has been hit as hard as California with gas prices. I'm sure a lot of you are going to say, "Oh, you aren't you going to be looking forward to those high gas prices in California this summer, Michael?" Of course. You know me. I'm looking forward to paying those high prices. Well, am I going to pay more than Florida? Yeah.

[00:02:15]So, is it going to cost me a few extra hundred dollars to be there this summer?

[00:02:19]Yeah. It's not something that breaks the bank for me, guys, cuz I don't drive that much. Like, I put gas in my car there like every couple of weeks. I put it in like half a tank at a time. So, in reality, it's only going to cost me probably a few extra hundred dollars for the entire summer, so not crazy. It's not like somebody who lives in California that has to commute, you know, 50 miles a day and sit in bumper-to-bumper traffic. Those people are going to be getting hit hard. And today, I'm at Pelican Harbor Marina here in North Bay Village, Florida. And here's the thing. We know this is due to gas prices spiking, not just because pawn shop owners are directly telling us, but gas prices went from about $2.98 a gallon on average to about $4.16 a gallon as I'm making this video, and those costs hit consumers instantly.

[00:03:09]Like, the next time you need to fill up your tank, you are now paying that higher price. So, that's not an expense like many others that can be delayed, and it can't be avoided. You know, people need to pay it cuz they have to get to work. They got to pick up their kids from school. Their car is their lifeline. This is a car-driving country we live in. And according to pawn shop owners, it's not just low-income people who are coming in for these loans, it's also a lot of middle-income folks as well who are coming in. And people are starting to pawn off higher-end items like jewelry and watches that are worth a significant amount of money. And in case you're not aware of how pawn shops work or operate or make their money is say you come in with a $2,000 gold necklace, right? That's what you paid for it. And they'll give you a loan on that thing, let's say for 800 bucks, you know, far less than what it's actually worth. And you're going to pay, you know, a pretty sizable interest rate on that loan, and you have usually like 30 to 60 days to come back and pay that loan. And if you don't, then that item becomes theirs, and they will turn around and sell it for a profit. So, either way, the pawn shop makes money.

[00:04:25]They either sell your item for a profit to cover the loan they gave you and then some, or you're going to repay that loan with interest. So, either way, they make their money from you. And pawn shops are one of those businesses that do well when the rest of the economy isn't.

[00:04:42]Like, for example, you have a lot of businesses that we've seen over the past few years that were booming when things were still going in an upward direction.

[00:04:52]But, now that things are starting to come down, pawn shops are thriving. And so, if pawn shops are busy, that means that things are breaking in other parts of the economy. 25% of pawn shops actually reported more activity this year than last year, and only 12% of them reported less. And here's how a lot of these loans are shaping up right now.

[00:05:14]The typical loan size is about $2 to $300, and your interest rate can vary anywhere between 3% to 25% per month and can equal a whopping 300% APR, which is, you know, the interest rate you would pay if annualized. So, these are very expensive loans. If someone's willing to take on a loan that expensive, you know times are tough. But, they're doing it because it's fast and accessible, right?

[00:05:42]You like I said, you can get the money right now. There's no application, there's no credit check, there's no waiting period because you're using your collateral to get that loan, guaranteeing that loan whether you pay it back or not. And the behavior at these pawn shops is also shifting. You know, people are pawning more valuable items. They're also asking for extensions on repayment, which is at the discretion of the pawn shop owner. And people are also defaulting more on these loans, and it's they're also selling items outright instead of borrowing. You know, so if somebody sells an item outright instead of borrows, to me, that's a pretty big indication that they know that they're going to have no chance at repaying that loan, so they might as well let the item go now for the highest amount of money they think they're going to be able to get for it.

[00:06:33]That's not a very promising indicator of where things are headed right now. So, it's pretty cool here. We have this little beach at the back of this marina.

[00:06:42]It's not really a beach, but they got sand here, and uh it's kind of neat.

[00:06:47]Here's another big behavioral shift that they're seeing at these pawn shops.

[00:06:50]People are pawning an item, paying back the loan, and then a couple of weeks later coming back in and pawning the same item again. So, this is an ongoing sign of cash flow problems, not just like a one-off issue where, well, you know, we kind of ran out of money this month, but by next month, we're okay.

[00:07:09]No. Now, the good news is some people are still able to pay off those loans and come back and have that item to pawn again, which is great, but obviously, that's becoming less and less the case for so many. And the reason for that is simply because people are going to pay other bills first. People are going to pay their rent or their mortgage, their utility bills, fill up their car with gas, etc., before they come in and pay that pawn shop loan. They're going to be much more willing to let that item go rather than not pay something that's more critical. Here's another thing a lot of us were told about this tax season. You know, everybody was saying, "Oh, the tax refund season is going to be huge this year. It's going to be so much bigger than last year, and this is going to help people tremendously." But, even though the tax refunds have been bigger, they've only been slightly bigger, nowhere near what people were expecting. People were thinking they were going to get thousands of extra dollars this refund season, and they're barely getting a few extra hundred, which kind of goes nowhere in 2026. And this also shows us that even with larger tax refunds than a year ago, that these small gains in extra money people are getting is still not enough to compensate for how much things are going up in cost lately. And you know, one thing that makes that extremely obvious in this economy right now are the surcharges, guys. I told you we were going to get into this. And what a surcharge is is it's just essentially an additional fee or charge of any kind on top of what you already have to pay for something. So, you're seeing a lot of credit card surcharges right now. Like, if you want to pay using a credit card at a vendor, they might charge you a 3% credit card fee. This is becoming more and more common. They're putting that extra cost burden on you, so they don't have to pay it. You're also seeing these surcharges at restaurants for employee health insurance or like in California in Marin County, they have this like a mandatory extra surcharge they put on your restaurant bill that goes towards something for the restaurant workers there. I can't remember what. And so, this is a sneaky way of companies, instead of raising prices directly, they just kind of layer on an extra surcharge for you. You see this a lot with the apps, the delivery apps. They put on all these extra fees, right? They get you with delivery fees. They get you with service fees. They get you with all kinds of extra things that end up costing you 10 or 15 bucks more. And here's the thing. With these extra surcharges that people have to pay, this is something that you only kind of get hit with once you've already kind of dedicated yourself to buying a certain item. So, when you go to a restaurant, you already sat down, you already ate your dinner, and you see the surcharge on your bill, even if it's a surprise, you don't really have a choice. You have to pay it, unless you're trying to do a dine and dash sort of situation. And this is just a lot of businesses' last-ditch effort to raise prices and shift more of the cost burden on you, rather than directly increase the price on any given item. But, as more and more people keep getting hit with these surcharges, it's going to make it so less customers return, because people are going to start realizing like, yeah, uh they're charging us more than they used to, and now all of a sudden we're always having to pay this extra surcharge. And this is spreading like wildfire, guys. Right now, 34% of small businesses now charge credit card surcharges, and about one in five restaurants nationwide add service charges or surcharge fees, which was up from 16% just a couple of years ago.

[00:10:55]Also, you're seeing airline companies do it, delivery companies, lots of retailers, and a lot of this has to do with the recent uptick in fuel prices.

[00:11:04]Back in 2008, there was a pool company who started charging a $5 monthly fuel surcharge during the 2008 oil spike. And he later ended up removing the charge once things kind of returned to normal, but here's the thing. 95% of customers paid it with no complaints.

[00:11:24]And so, a lot of people are okay with these temporary charges, but when the fees don't go away, that's when people start getting frustrated, and these companies will start losing business.

[00:11:37]And this is actually used as a psychological trick to raise prices overnight for a business without raising prices. And consumers could deem it to be more socially acceptable, and so they're able to get away with this a lot easier.

[00:12:04]But, we recently did see these surcharges being banned in certain industries. Like, when you buy concert tickets now, they have to give you the full ticket price upfront, whereas before they could hide behind all these surcharges in the end, and charge you a lot more than it actually is. Same thing if you want to book like a short-term rental on Airbnb, they have to show you all of the fees upfront now, because before you used to see it, "Oh, this is a great low price." But, then by the time you pay the Airbnb service fee, and you pay the cleaning fee, and all this other nonsense, it ends up costing $500 more. And let me just tell you guys, like, the prices that I see are just absolutely insane right now in how much things are going up. Here's a restaurant example right here out of Miami Beach, where I live, okay? There's a a restaurant I used to like going here. I won't say the name, but it's a sushi restaurant, very nice place. Used to be very reasonable happy hour prices. And one thing I always used to like to get were the oysters at happy hour. And so, it used to be three oysters for $7. And that does sound like a lot of money, but you're paying $28 for a dozen oysters, extremely high quality, delicious stuff, okay? I haven't been there since last year before I went to California, okay?

[00:13:19]So, we're talking about a year ago I was there. Now, that same happy hour plate of oysters for three oysters went from $7 to $12.

[00:13:31]So now, you have to pay $48 for that same dozen of oysters, whereas just a year ago it was 28 bucks, guys.

[00:13:42]That's insane. Those are the type of decisions businesses are facing right now. Do you just increase the price of everything and avoid the surcharge, or do you just keep the price the same and tack on all these extra little fees? The end result was the same, you and I paying more. And some of these extra fees are really getting out of hand, especially with the airlines. Like, the airlines are charging all these extra fees with baggages now, and hotels are charging more in resort fees than ever before. The delivery apps are charging fuel surcharges now. It's even starting to bleed over into UPS and FedEx and Amazon. They're charging a 3 and 1/2% surcharge in some cases now. Like, it's getting ridiculous. And you know, the biggest problem with all of these surcharges is that once they're implemented now, they probably aren't going to go away. Just like all the price increases that we've been seeing happening on different products and services. You know, it's all being blamed on inflation and the recent surge in gas prices, but the reality is, like I told you already weeks ago, these price increases are going to be permanent, guys, because once these companies realize they can get away with charging you a surcharge or a higher price for something, and it doesn't meaningfully impact their sales, they're going to continue doing it. They have no reason not to. Like, airlines first started charging baggage fees back in 2008. Have they ever disappeared since then? Absolutely not. They've only gone up. Rental car surcharges got implemented all the way back around 9/11. That's still happening. All of these extra restaurant surcharges first started around the pandemic. Those are still happening. So, even when the cost drop for the business owners, they often keep these fees and higher prices in order to boost their profit margins. Who wouldn't? I mean, that's just entrepreneurship in action. If people are willing to pay your price, you're going to charge it. Why? You don't have any incentive to lower the price. But, this is creating a lot of distrust for the consumer, and people are getting tired of this, and I can guarantee you this is going to lead to people spending less and less at these places that are trying to continue getting away with these deceptive sales practices. And how do I know this? Well, just by looking at the latest consumer sentiment numbers, guys. In fact, the University of Michigan consumer sentiment survey just came out, and it's basically at record lows now, going back as far as 1980.

[00:16:14]People haven't been feeling this pessimistic about the economy since 1980. Now, gas prices are one of the obvious things that's irritating a lot of people right now. But, take a look at this historical consumer sentiment chart. The last time it got anywhere as low as it is right now was back in June of 2022. Now, it's at a record low. Gas prices are having a major influence on how people are feeling about things right now. And the weak job market is also having a major impact on this bad consumer sentiment right now. And with the increase in the cost of living all happening at once, like, this has been the perfect economic storm. We're in the stagflation economy right now, where the real economic growth is nil right now.

[00:17:03]Meanwhile, inflation continues to surge, and if it continues to surge at the rate that it is right now, it's going to be double-digit inflation in 2026, something a lot of people never thought would happen. Then you have a tough job market or an impossible job market, where good luck getting hired right now if you need a job. People who are lucky enough to still have a job are actually being offered reductions in pay just to be able to keep their jobs right now, all while everything continues getting more expensive. And then we have this war in Iran that's been happening since the beginning of March, which was a huge curveball that nobody saw coming, that's just making everything worse. Right now, 69% of Americans are very concerned about gas prices. And basically, anytime gas prices spike throughout American history, consumer sentiment plunges, guys. If we look back at the chart again, you could see that back in 2008, consumer sentiment also plunged back then, and that was a direct correlation with gas prices. Same thing happened back in the middle of 2022, which was the last low reading we had before this one.

[00:18:14]So, it all boils down to gas prices.

[00:18:16]Everybody is impacted by this, and even if you're an EV owner, you know, I see a lot of that. Like, oh, people who drive EVs aren't impacted by this, you know, all these suckers paying four or five dollar a gallon gasoline, while I drive my EV, and I don't have to worry about it. Well, that's only true if you're able to charge your car at home from solar power. If you're somebody who fills up your electric at a public charging station, you're going to be paying higher prices, too, cuz a lot of that electricity still comes from natural gas sources. And on a quick side note, I think a lot of people are going to rush into getting an electric car because of these higher gas prices, only to find out that it's not really much cheaper to own one of those, either, and comes with its own set of problems. But, hey, people have to make their own mistakes. I don't really care if you do that or not, or you decide that's the right decision for you. I'm just calling out a trend that we're starting to see happen. And hey, listen, maybe that'll be the the right play long-term. Maybe that's all part of the grand plan, right? Like, maybe that's what they exactly what they want. They've been trying to push this EV initiative forever. What better way to force people to adapt and start buying EVs than to increase the price of gasoline to where it's unaffordable. Something else to think about. But, the point is that every single week now that I'm making these videos, we are starting to see new economic data that keeps coming out showing us all of the weak spots in the economy, guys. And the more weak spots that we have, and the more holes that start getting poked into the mainstream narrative, the more things are going to continue to deteriorate and fall apart.

[00:19:53]And I'll tell you once again, "Oh, this was all bad news, Michael. What is anybody supposed to do about it?" I've told people what to do about it a million times. I'll say the same things I always say. Get yourself out of debt.

[00:20:04]Have no debt. Maybe just a mortgage.

[00:20:06]Make sure your income exceeds your monthly spending by a reasonable amount.

[00:20:13]Make sure that you have an emergency fund. Make sure that you have gold and silver. Make sure that you have assets that are producing a return, that are working whether you're working or not.

[00:20:25]Those are all basic financial things that everybody has to do to be able to survive in 2026. And if you're not doing all of those things, then for sure you are falling behind. And I truly believe everybody can do those few simple things. And if you're not doing it, you really don't have anybody to blame but yourself. So, let me know what you guys are seeing out there in the comments with pawn shops and consumer distress.

[00:20:51]And if you don't want to wait for my next video to come out, check out this one on the screen right over here, and I'll see you in the next one.