Want to get into a business that thrives during a downturn? For repossessors and pawnbrokers, the nation's loss is their gain.
It’s not as if Kevin McGivern spends his time wishing economic ill upon us all. He’s too busy. But, reclining in a chair at his Rogers Park office, the longtime repo man can’t deny that the rising rate of delinquency has been great for business.
The repossession industry, McGivern’s Equitable Services Inc. (7475 N Rogers Ave, 773-262-8400) included, is one of a few in-demand “countercyclical” fields that’s booming during the current bust. McGivern says Equitable’s 32 repossession crews are struggling to keep up with demand for their services: towing, storing and liquidating everything from air- and watercraft to farm equipment. “There’s an uptick in all of it,” he says. “Sometimes you feel bad, but if it wasn’t for people like me, no one would ever be able to get a loan.” On a recent typical day, Equitable agents seized a sundry collection of property, including $300,000 worth of marble-fabricating equipment, a large mainframe computer and a bulldozer—all pried from the hands of people chronically missing loan payments. Never before, McGivern says, have his crews had to travel so often to moneyed North Shore suburbs and Lincoln Park. “These are big companies and people with big salaries who’re losing it all,” he says. “It’s surprising.”
Since he works so closely with negligent borrowers, McGivern anticipated his current 20 to 30 percent swell of business about a year before the financial crisis hit the headlines. “It was obvious that people were living beyond their means, and lenders were letting them,” he says. “We were hauling away BMWs from people who couldn’t even afford small payments.”
In terms of downturn profiteering, McGivern’s kindred spirit is pawnbroker Randy Cohen, co-owner of Royal Pawn Shop (428 S Clark St, 312-427-6542), Chicago’s oldest pawn emporium. Cohen’s hubris regarding the global financial meltdown—“Bring it on!” —is enviable. And he can back up his boast with bucks.
“We’ve been busier than we ever have been,” says Cohen, who, along with his brother Wayne, runs the business his grandfather established 70 years ago. “All day long I hear sob stories. People are getting laid off and they need quick cash to pay their bills, [pay] their mortgage and keep gas in the car, so they come to us. It’s the circle of life.”
Cohen’s South Loop shop is packed with typical pawnshop miscellany: stereo equipment, televisions, musical instruments and a huge gallery of blingtastic jewelry. The inventory is a veritable trail of tears—largely comprising items that people have either outright sold to the shop or offered as collateral on a loan they never paid back.
Cohen says the exceptional commercial surge he has experienced over the past three months (“Our loans are up 30 to 50 percent and our buys have tripled”) is a confluence of two factors: (1) masses of financially distressed first-time pawners, and (2) a new breed of bargain hunter—the kind of person who, pre–credit crunch, wouldn’t have even considered browsing the merch at a pawnshop.
Most interesting, Cohen says, is the influx of new customers from affluent ’burbs like Highland Park looking for quick cash or, say, a cheap digital camera. As his formerly flush clientele parts with pricey nonessentials, Cohen has netted some inventory firsts, including a kayak and two Segways. “They come in—and it’s pretty obvious some of them have never been in a pawnshop before—and they just sell off their stuff right off the bat,” Cohen says. “They’re too ashamed to say they need a loan.”
Cohen and McGivern have been in their respective fields long enough to know that the current slump (and, in turn, their own prosperity) won’t last forever. “I give it six to eight months,” McGivern says. “By then, the people who are going to collapse will have already collapsed, and banks won’t be giving new loans for people to default on. My business won’t just slow, it’ll come to a screeching halt.” But as the business of countercyclical industries begins to decline, it’ll be a sure sign that things are looking up for the rest of us.