THE INTERVIEW: Cash Converter boss David Patrick is happy to profit from the ...
David Patrick is not embarrassed to profit from people struggling in the harsh economic climate.
Business is booming at Cash Converters – ‘the world’s biggest retailer of second-hand goods’ – where he is UK chief executive.
Customers sell unwanted or used goods for cash and these are then offered at knockdown prices.
‘Here you get a face-to-face honest deal with no hidden catches if you need cash. And if you cannot afford brand new goods then we offer a great alternative,’ he says.
Cash Converters started as a single shop in the Australian city of Perth in 1984 and has grown to more than 600 stores worldwide.
Patrick took over as chief executive two and a half years ago and he has doubled the number of stores here to 204.
The international company now trades on the London Stock Exchange as Cash Converters International.
An aggressive policy of expanding through selling franchises saw the company post record pre-tax profits of £26 million – up by 24 per cent – on revenues of £120 million for the year ending June 30.
Despite the success, Patrick, 55, is defensive: ‘We are a retailer and not a pawnbroker – the world’s biggest retailer of second-hand goods,’ he insists.
Customers who sell their goods have the right to buy them back within 28 days if they pay 30 per cent on top of the amount initially received. Many cash-strapped customers use this service for emergency loans.
Cash Converters also provides a traditional pawnbroker arm that can lend for up to six months. Rates can work out at 156 per cent APR, but nine out of ten items pawned are reclaimed. The company also offers unsecured loans and a chequecashing service.
The rates are stiff. For example, a £300 personal loan can cost £592.68 if it is paid back in six months – an interest charge of almost 100 per cent.
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However, unease over payday loans has hit Cash Converters. Texas-based pawnbroker giant EZcorp pulled out of a £44 million deal to buy 20 per cent of Cash Converters shares that would have given it a controlling stake. It already owns 33 per cent.
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Houston Payday Loans: New Regulations Enacted | Articles 4 Net ...
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If you live in the great state of Texas then you may be interested in knowing that your state is known for more than just big sky, and great barbecue. It’s also known for having some of the loosest payday lending laws of all the states in the entire US. Coincidentally it’s also unique in another way. That is that it also has the highest number of payday loan borrowers of any state in the entire US.
So it should come as no surprise that lawmakers have recently been focused on instituting a number of changes in the way these businesses operate within their borders. Changes in laws that may affect you the next time you go to secure loan from a payday lending franchise. Now it’s important keep in mind here that these new laws that were enacted effect not just community-based lenders but also those that operate over the Internet as well.
For instance one of the recently enacted laws stipulates you may not borrow any more than 35% of your monthly income at any one time. Now keep in mind that this is your income after taxes and deductions have been taken out of your check. Now this might not seem like a big change until you do the math and realize that in order for you to borrow $1000 from a payday lender in Texas you’ll have to be bringing home roughly $750 after wage deductions.
Then one more new change in Texas laws makes it a crime for a payday lender to threaten you with criminal prosecution if you default a loan. Now make no mistake here though. If you have committed a crime such as submitting falsified documents during the application process you can, and most likely will still be prosecuted. The new law simply prevents you from being threatened with impending prosecution.
The new laws passed also put a cap on the interest that can be charged by a paycheck cash advance lender. You see, all along these types of loan franchises were pretty much unregulated. And all it took was a $100 license fee for someone the open one in there. These new laws however, now put these lending franchise operators under the same regulatory umbrella that covers banks and credit unions.
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