Beyond the main headlines about pawnshop operator First Cash Financial Services
Pawn balances in Mexico shot up 30% year over year, to $13.3 million, compared to the 13% increase in domestic pawn balances, which grew to $21.4 million. First Cash operates in eight states in Mexico and, with many stores amassed along the Texas side of the border, heavily serves the so-called "unbanked" population, largely Mexican.
Foolish editor Joey Khattab referenced the unbanked when he discussed the growth of peer-to-peer lending as a disruptive force in the world of banking. The unbanked and underbanked -- people with little or no ties to hoary financial institutions like Bank of America
According to the report, the typical Mexican worker in the U.S. sends back to Mexico some $2,000 a year, with the average transaction at $300 each. This field has typically been ruled by Western Union
Business with Mexicans is typically better than similar business with Americans in that Mexicans have lower forfeiture rates than their U.S. counterparts. They typically repay a higher percentage of their loans, 80% or more, compared with 70% in the U.S. For those customers who can't repay their loans, Mexican or American, First Cash and other pawnshop operators subsequently sell the property secured by the loan, which is a lucrative business itself. First Cash reported that gross margins from sales of pawn merchandise had increased to 41% year to date, while for the third quarter it was 42%, up from the 39% mark it achieved last year.
Considering First Cash trades at a premium to competitors Cash America
With more store openings planned, and additional Auto Master buy here/pay here used-car dealerships in the works, First Cash Financial may just end up having investors flush with cash.
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