Los angeles instant cash loan

There, in the dead of night on deserted city streets you'll see them: neon signs flashing "Instant Cash Loans," "CA$H," "Cash in Two Hours."

Visions of loan sharks, shady underworld figures, usury rates and broken kneecaps travel through your head. Are these businesses really legitimate?

You think of guys named Tony and Vinnie in black suits and ask: What are these places? And how do they get their money? Can they be trusted?

For a small but very real segment of Los Angeles County, though, these quick-loan emporiums are the last stop on the financing merry-go-round to make a car or tuition payment, consolidate bills, cover an emergency and, in some cases, refinance a home mortgage.

You probably wouldn't find big real estate developers filling out loan applications for a new project at 3 a.m. at one of these places, or trading in a diamond ring for some quick cash to make a payment to an office building contractor.

But what you will find are an increasing number of ordinary folks caught in a financial squeeze brought on by a lingering recession and job insecurity. No longer are these places just the domain of the desperate, who may or may not have a job.

With money tight because of the collapse of the savings and loan industry and tougher loan requirements by commercial banks, borrowers are looking for new sources of financing. And the beneficiaries include these businesses that are usually found in strip malls or other commercial areas, are often open 24 hours a day and promote themselves as cash cows.

What we're talking about here comes in two basic categories: Loan companies that require as security some form of real estate, or real property, and those that use personal property as collateral.

Those that require real property are in the business of financing or refinancing real estate -- usually a home. And those that require personal property are in the business of making loans -- usually in cash -- for anything.

What they have in common is they both advertise quick and easy money. We're not talking days for loan approvals here, we're talking minutes!

Real estate or personal loans at traditional financial institutions can take weeks between application and approval. "You can get a loan here in five minutes," boasted the owner of Collateral Lender of Beverly Hills. "But we wouldn't discuss interest rates over the phone."

At Home Budget Loans in Los Angeles, which requires real property as security, you can get a loan of up to $15,000 in two hours, said Stanley Zimmerman, who is 60 and has been in the business since 1950.

Larger loans of up to the $100,000 ballpark or more can take one day between application and getting the check, Zimmerman said.

It may surprise you, but Los Angeles law enforcement agencies say they don't get an unusually high number of complaints about quick-loan businesses. Prosecutors at the Los Angeles county and city attorneys offices said consumers should be wary of lenders that require up-front fees, however. (None of the businesses interviewed for this article said it required advance fees.)

"Requiring some sort of an advance payment should be a warning. It might be that they (the lender) wouldn't be there tomorrow or they have no intention of making the loan," said Allen Field, a deputy county attorney in the major fraud division.

A spokeswoman for the California Bankers Association in San Francisco said the business does not pose a threat to established banks, even during this time of economic recession.

"I would assume that they charge high fees and rates but I would also assume that they serve a certain segment of the public," said the spokeswoman.

While rates at traditional sources of financing are at their lowest levels in years, the interest charged by quick-loan businesses hasn't dropped. It's safe to say the business is immune from monetary regulations set by the Federal Reserve Bank. At these places, you pay for fast money.

For a first mortgage on a home, buyers can currently get rates of about 8.5 percent. At places like Home Budget, which specialize in second or third mortgages, the rates can vary between 9 percent and 18 percent, plus points and processing costs.

At Brothers Collateral Loans ("Pawnbrokers to the Stars") in Hollywood, loans that are secured by personal property carry a 2.5 percent per month interest rate, said Rudolph Gintel, vice president. In addition, there are storage fees for personal items held as collateral.

Where these lenders get money for loans varies by whether they are secured by real or personal property.

At Home Budget, mortgage loans are resold, at a profit, to individuals or pension trusts. Or the company uses its lines of credit or its own funds to finance its loans to consumers, said Zimmerman.

Gintel was more vague about where his company gets its money. "Our money is our money. It comes from us, my family. I have been in this business for many years and have built a good reputation. Some pawnbrokers have lines of credit but we don't have to go that way," he said.

Most people in the quick-loan business seem to have been in it for years, mainly because the majority of their operations are family owned and run. Because it takes so much capital to get in the business, there hasn't been a rush into the industry by young entrepreneurs eager to make some quick and easy cash.

There is money to be made in the business but there is also some risk, particularly at the pawnshops. Because they keep so many valuables and cash, they are targets of robbers and therefore require elaborate security.

At Brothers, for instance, there are bullet-proof glass and walls, alarm systems and weapons. "With our system, the police will be here in three minutes," said Gintel.

The bad reputation of these quick-loan businesses goes back centuries. Even William Shakespeare wrote about them with his Shylock character in the "Merchant of Venice."

People in the business, naturally, say the notorious reputation is not deserved and that most of them are legitimate operations.

"It's just like any other business. It's just like being a reporter," said Zimmerman. "There are some good ones and bad ones; some you wouldn't trust and are dishonest and there are others you would trust and are very honest."

Companies like Home Budget look like any other business, except maybe for the fact that they are open 24 hours a day, five days a week. Walk into their office and there will be people working at desks with computers. Businesses like Home Budget call themselves loan companies.

But businesses that require personal property often call themselves pawnshops and tend to be much smaller operations with just a few employees. Unlike the lenders that require real property, the pawnshops often boast about their confidentiality.

Loans from the pawnshops are often in cash rather than in checks. They aren't reported to credit-rating agencies and confidentiality is promised. You basically bring in a piece of personal property, like a diamond ring, a car or whatever, leave it with the lender, and walk out with cash.

So a premium is placed on intuition and instinct that the borrower can be trusted.

"I would say that 95 percent of the people come back and redeem their property when the loan is paid because these items are valuable to them," said Gintel. "Most of our clients are middle class (people) who are faced with an emergency, they need cash right away and that's why they come to us."

But because it also promotes itself as "Pawnbrokers to the Stars," Brothers has loaned money to major show business celebrities who were facing some sort of financial emergency, said Gintel. He declined to reveal names or specifics.

At places like Home Budget, the loan process is a little more traditional, but even there the default rate is less than 5 percent, said Zimmerman.

"We'll ask them about themselves and then check out their information so if they don't tell us the truth we'll find out. Most people tell us the truth," said Zimmerman.

He, too, said people come to his business for a variety of reasons, the most common one being that they are in need of money in a hurry. For instance, Zimmerman remembered the time a couple needed $10,000 to pay for their grandson's treatment at a drug and alcohol rehabilitation center.

"They wanted the money before the grandson changed his mind about going for treatment," he said.

Zimmerman compared his business to operating a convenience store.

"If you want to buy $100 of groceries you'll have to spend some time and go to the supermarket. But if you want something quick you'll go the 7-Eleven. You'll pay more but it's more convenient," he said.

COPYRIGHT 1992 CBJ, L.P.
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