The difficult economy has many of us seeking new alternatives to make ends meet. In tonight's Economy Rockford report... we find out that local pawn shops and payday loan outlets are prospering. For some, these businesses are providing an important service.

At Paymaster Pawn shop in Rockford.. the collection of jewelry.. electronics... and musical instruments keeps expanding.

" It used to be gas but now many need money for prescriptions... Grocery items have gone up .. and there are a number of people laid off now that are maybe drawing unemployment rather than a full paycheck..they certainly need a little extra to get them through."

The shop has recently seen a 10 to 15 percent spike in items pawned for cash.

"A lot of people need money for their car loans.. for utility bills which have also gone up."

And now that banks are getting tougher on loan applications.. Vandiver says many are turning to pawn shops as the alternative. There are no credit checks and no worrying about how to pay back loans.

"All loans are collateral for 30 days. I know our rates are considerably less than the cash stores."

We spoke to a manager at Cash 2 Go payday loan outlet on East State street. He says the current conditions present a lose-lose situation for his type of business and the customer. The store has been inundated calls about short term loan opportunities to help pay bills... But most of them are denied right off the bat due to lack of a job or a bank account. And even some of those folks who *are approved for the quick cash aren't paying it back. He doesn't expect this change any time soon.

But back at Paymasters Pawn, Vandiver sees his future full of opportunity.

When You’re in a Financial Pinch (Better Business Bureau)

When you need money quick, it is tempting to look for a quick solution. Who wants to spend time researching loan options when the fridge just died? You need $500 and you need it fast.

If you lack a savings account, you do indeed need to take action. Just make sure it is the right action. Opting for the “easy way out” could leave you with “no way out” in a matter of weeks.

What Are Your Choices?

First, call your creditors. Before you borrow new money, contact your credit card and mortgage lenders. They may offer some leniency on your current debts, which would free up a bit of cash. Some have hardship programs that permit skipping a payment or making a smaller minimum payment. Maybe your creditor would be willing to reduce your interest rate.

Second, beware of “quick and easy” solutions. Advertisements for “quick and easy” loans can tempt any consumer. Don’t be lured into making an expensive mistake.

Payday Loans: Often referred to as “quick cash” or “check cash” loans, payday loans are easy to obtain because no credit check is required. Unfortunately, they carry steep annual interest rates (sometimes more than 500%).
Consumers find their debt snowballs if they cannot pay back the loan by their next payday. Some choose to extend the original loan, along with the added finance charges. Some visit another payday lender to take out a second loan, and a third loan, and so on. The Center for Responsible Lending found that the typical payday borrower eventually pays back $793 for an initial $325 loan.
Eleven states have banned payday loans. Congress passed a law capping the interest rate (36% APR) that payday lenders can charge military families. Payday lenders claim their loans are less expensive than incurring repeated bounced check fees, late payment fees, or having your utilities cut off. You do the math – is it worth paying an annual triple digit interest rate?