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 News Around the Republic of Mexico | January 2008 
Mexicans Pawn Gifts to Pay Bills
 Dudley Althaus - Houston Chronicle
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| | Mexico City's Monte de Piedad pawnshop opens at 8:30 each morning. By 9 a.m., the lines are 20 to 30 people deep at the windows where jewelry is traded for a loan. (Gregory Bull/AP) | | |
After the holidays, Mexico's pawnshops see heavy traffic as families struggle to make ends meet.
Mexico City - For legions of cash-strapped Mexicans facing the bill for last month's jollies, now is the time to pawn the jewels.
About 10,000 people a day have been lining up in Mexico City - and more than twice that number nationwide - at the offices of the Monte de Piedad, a 233-year-old nonprofit pawnshop that has become a national institution. Thousands more are heading for other pawnbrokers.
Hocking everything from necklaces, watches and earrings to cars, refrigerators and even houses, the pawners hope to endure the annual post-holiday mountain of debt, which many call the "January incline."
"A lot of people come, especially this month, to get a little bit of extra cash," said Claudia Solano, 22, who pawned a pendant given to her by a boss in order to raise the funds to pay for her university graduation.
"No one plans properly for the holidays, and they get in trouble," she said. "It happens every year."
THOUSANDS PAWN GIFTS
All told, Monte de Piedad officials expect 750,000 families nationwide to pawn something - mostly jewelry - this month. If past patterns hold, all but 4 percent of the pawned items will be reclaimed within the next 17 months.
Founded in 1775 as a charitable organization by a religious mining magnate, the Monte de Piedad has long been a reliable source of emergency funds for many poor Mexicans. But now, with consumerism rampant and holiday vacations common for even working-class families, the institution has become a tradition.
"People come to us for their daily necessities," said Gustavo Méndez, the pawnshop's spokesman. "We have become a daily source of finance."
Despite more than a decade of modernization in banking in Mexico, any sort of credit, or even a bank account, remains a luxury. Forty percent of Mexican adults live outside the country's financial system, according to the Condusef, a government agency with oversight of the finance industry.
Even those fortunate enough to have access to credit face serious hurdles. Credit cards charge as much as 80 percent in interest and fees annually. And obtaining a loan from a bank entails weeks, sometimes months, of bureaucratic maneuvering.
BANKS NOT TRUSTED
"Many people are still afraid to go to a bank," said José María Aramburu, a senior financial analyst at Condusef. "A pawnshop is much easier."
More than 22 million transactions are expected to be made this year at the scores of Monte de Piedad's branches across Mexico, Méndez said. Millions more deals will be struck at other nonprofit pawnbrokers and those operating as a business, which charge as much as 160 percent in annual interest.
As many as 20 million Mexicans - nearly one-fifth of the population - use pawnshops for their financing, Aramburu estimates. Many are repeat customers.
WAY OF LIFE
"There are people who line up to pay their loan and recover their item and then line up immediately afterward to pawn it again," said Méndez, the Monte de Piedad spokesman. "A good number of our clients are regulars, and they have used us their entire lives."
Cash loans at the Monte de Piedad are made for up to half the assessed value of jewelry - less for houses and other big-ticket items. Interest on the loans is fixed at 4 percent a month. Payments on at least the interest must be made every five months, and the loan has to be paid off in just shy of a year and a half.
The pawnshop, which occupies a colonial building on Mexico's central plaza, opens at 8:30 each morning. By 9 a.m., the lines are 20 or 30 people deep at the windows where jewelry is traded for a loan.
Behind the windows, nearly a dozen sharp-eyed and well-experienced evaluators assess the value of the offered items.
The assessors scrape a necklace or ring to make sure it's not mere gold or silver plating. They pull out magnifying glasses to take a close look at the quality. They throw the jewelry on a small scale to weigh it.
And then they offer a price, based on quality and weight, which is almost always accepted.
The whole process usually takes less than a minute.
CONVINCING FAKES
"There are many good fakes, so it's difficult," said Benjamin Padilla, who has been assessing jewelry here for 42 years. "Mexican technology is marvelous, and there are some excellent copies."
Cecilia González waited patiently in line about 20 people back from Padilla's window one morning early in January. A frequent client at the Monte de Piedad, González, 35, had brought a necklace and earrings to pawn.
The money she got would help pay the property taxes and utility bills due later this month, Gonzalez said. Perhaps a little would be left over for her children's school needs.
"Things are difficult," the 35-year-old housewife said. "They are always difficult. This is the only thing that makes the situation a bit easier." |
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