Archive for the ‘Pawn Ecomomics’ Category
Friday, March 5th, 2010
By Bobbi Dempsey • Bankrate.com
If you’ve found yourself needing some quick cash recently, you may have considered heading to a pawnshop. You’re not alone. The bad economy has prompted many people to visit a pawnshop for the first time.
“We’re seeing more people who have never been in a pawnshop before looking for short-term solutions without having to sell the farm,” says Rick Harrison, whose family owns the Gold and Silver Pawnshop in Las Vegas and stars in The History Channel series, “Pawn Stars.”
You shouldn’t feel afraid or embarrassed about heading to a pawnshop, but there are some things you need to know.
Don’t believe the bad image
Pawnshops aren’t the shady, scary places they often appear to be in the media. “Pawnshops have been unjustly vilified by the main stream media, and so most people perceive pawnshops to be dirty and seedy,” says Harrison.
Instead, pawnshops are regulated by 12 federal laws plus numerous state and local laws,” says Emmett Murphy, spokesman for the National Pawnbrokers Association, or NPA. “The majority are clean, well-lit stores run by people who pride themselves on providing good customer service.” Murphy advises checking with the local Better Business Bureau, or looking on the NPA’s Web site for member stores in your area.
Getting the loan
Here’s how a pawnshop transaction works:
Pawnshops offer collateral-based loans — meaning the loan is secured by something of value. You bring in something you own, and if the pawnbroker is interested, he will offer you a loan. The pawnbroker then keeps your item until you repay the loan. The loan amount will likely be a small fraction of the item’s actual value.
You can sell your item to the pawnshop outright, but pawnbrokers are less enthusiastic about these transactions because loans offer much more profit potential for the pawnbroker.
You must receive a pawn ticket. Don’t lose this! Not only is it the receipt for your item, but it also summarizes the terms of your loan: fees, expiration date, description of your item, etc.
Repaying the loan
You have two choices on repayment:
Return to pay the balance — including the loan amount plus all added fees — before the deadline, which is usually one to four months after the initial transaction.
Don’t return and the pawnshop keeps your item. Aside from losing your item, there are no other consequences: no collection action and no affect on your credit report. On average, though, 80 percent of all customers do reclaim their items, according to the National Pawnbrokers Association.
In some locations, you can extend the loan period by up to several months, but you’ll incur additional charges.
The interest rate explained (… sort of)
The dollars and cents of pawnshop loans get a little complicated because: a) rules regarding the fees vary widely from state to state, and b) it’s not a cut-and-dried interest rate.
The term “interest rate” can be very confusing, so it’s better to think of total allowable “finance charge,” says Steve Krupnik of South Bend, Ind., creator of the Pawn Shop Advisor coaching program and author of the book “Pawnonomics.”
“Pawnshop loans are nearly all state-regulated, and ‘finance charges’ can vary from 5 percent per month to 25 percent per month. In Indiana, the ‘interest rate’ is capped at 36 percent APR or 3 percent per month, but pawnshops can charge an additional 20 percent per month service charge, making the total allowable finance charge 23 percent per month,” says Krupnik.
In New York, the maximum interest rate is 4 percent per month, and a service charge of up to $10. The interest rates may seem steep, but Murphy says these aren’t meant to be a substitute for bank loans.
“These are what we call ’safety net loans’ and are usually for life emergencies.” The typical fee, he adds, is often lower than the cost of a bounced check or a disconnected utility.
To learn the maximum rates allowed in your area — along with any rules regarding pawnshop transactions — check your state’s Web site; most likely, the information will be in the consumer protection section.
The bottom line: Make sure the pawnbroker clearly explains all the fees involved in your loan before you finalize the transaction. These terms also should be listed on your pawn ticket.
What pawnshops do — and don’t — want
When considering pawning something, keep these tips in mind:
Don’t: Offer anything outdated, difficult to store or cheaply made, Krupnik advises.
Do: Go with jewelry or coins, Harrison suggests. Other good choices, according to Krupnik, are firearms, high-quality tools and musical instruments.
Be prepared for red tape
The pawnbroker is legally obligated to confirm that you are the legal owner of the property.
“They will ask you enough questions about your property to become comfortable with the fact that you own it,” says Krupnik. “Do not be offended; the pawnbroker is just trying to make sure that both you and the property are legitimate. Also, if you do business with the pawnbroker, expect to have to show a government-issued ID. It is required by law.”
Tags: consumer credit, Credit Crunch, Economic Indicator, Pawn Loans, pawnbroker, pawnshop
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Tuesday, February 23rd, 2010
From Global Times dot cn
While we regularly hear of the number of new cars hitting Beijing’s roads, there’s less discussion of the second-hand auto market, which has also developed rapidly in recent years. However, the financial services aimed at second-hand auto merchants is far from caught up with the development of the auto market, so pawn shops featuring rapid financing and flexibility have taken the initiative to seize the market for future growth.
READ FULL ARTICLE HERE
Tags: China Economy, consumer credit, Pawn Loans, pawnbroker, pawnshop
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Friday, January 29th, 2010
No doubt the finest book ever on the history of pawnbroking in the US! Brand New and Available right here. IN HOCK
Tags: consumer credit, History Book, In Hock, Pawn Loans, pawnbroker, pawnshop
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Friday, January 29th, 2010
From St Catharines Standard
Posted By REUTERS
Mexicans are lining up at pawnshops to hock their jewelry, family heirlooms — and in one case a harp fashioned from a shark’s jaw — in more evidence Mexico is struggling to recover from a deep recession.
Maria del Refugio Garduno, a 60-year-old widow, pawned her watch for 400 pesos ($31) after her son lost his job last month, sending her household’s finances into a tailspin.
“I had to come here just to be able to buy some medicine,” Garduno said at a pawn shop in the capital, Mexico City. “Our money just isn’t going far enough.”
Across the country, unemployment remains near its highest level in 14 years even though Mexico’s recession technically ended in the third quarter with a big industrial rebound.
The government thinks better jobs data from December shows Mexico has turned a corner in terms of employment, but even the finance ministry expects only a partial recovery from last year when the economy likely shrank about 7%.
Loans made at Nacional Monte de Piedad, Mexico’s largest chain of pawnshops, rose about 20% during the first three weeks of January compared to the same period in 2009.
The increase is higher than the 10% rise in pawns during 2009, and some people borrowing against their wares said recent tax hikes and rising government-set fuel prices had put extra pressure on their finances.
A value-added tax on most goods rose by 1 percentage point to 16% on Jan. 1, a few weeks after the government bumped up gasolizne prices after keeping them steady most of 2009.
“It’s hitting me all at once,” said Pedro Uribe, a street vendor in downtown Mexico City, who pawned one of his wife’s religious figurines.
Tags: consumer credit, economic crisis, Mexico City, Pawn Loans, pawnbroker, pawnshop
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Saturday, January 9th, 2010
Business Books TOP FIVE USA — Pawnonomics - Pawnbrokers assume big risks and still make better loan deals than banks — plus lots more you don’t know about pawning.
Read more: http://www.shanghaidaily.com/article/blog.asp?id=425162#ixzz0c8BXnA86
Tags: consumer credit, pawnbroker, pawnshop, Shanghai Daily
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Thursday, December 3rd, 2009
I wonder if the FDIC even considered the fact that it’s very difficult to take out a payday loan without having a bank account? That leaves pawn shops as the ONLY option for these consumers seeking short-term credit.
By David Ellis, CNNMoney.com staff writer
NEW YORK (CNNMoney.com) — New York State is known as the nation’s financial capital, yet nearly one in 10 of its residents do not have a checking or savings account.
And while Texas is densely populated with banks, nearly a quarter of households in the Dallas-Forth Worth area have gone to a pawn shop or check cashing company recently to carry out a simple financial transaction.
Those were just a few of the findings of a new government survey released Wednesday on Americans’ access to basic banking services.
The survey, which tallied responses from roughly 54,000 U.S. households, marks the first time that the Federal Deposit Insurance Corp. has published such data.
Perhaps one of the biggest revelations of the study was that approximately 7.7% of all U.S. households, or 17 million Americans, were considered “unbanked,” meaning they did not have any sort of a checking or savings account.
The most common reason cited, according to the study, was a lack of funds. More than a third of those considered “unbanked” said they did not have enough cash to warrant having a bank account.
In fact, nearly 20% of all U.S. households earning $30,000 or less per year did not have a bank account.
The study also found that almost a quarter of all households headed by someone who didn’t finish high school were considered “unbanked.” Meanwhile, nearly one of every five African-American or Hispanic households do not have a checking or savings account, according to FDIC data.
Another key finding of Wednesday’s survey, was that many Americans that actually have bank accounts still look elsewhere to cash their checks or borrow money.
In fact, nearly 18% of all U.S. households have relied on payday lenders, pawn shops or check-cashing outlets at least once in the past five years.
Such businesses have often been criticized for charging consumers rates that would even make loan sharks blush. In some instances, borrowers pay the equivalent of an annualized interest rate as high as 500%.
Americans living without a bank: See a state-by-state breakdown
People who were polled, however, said they continued to use these services simply because they were convenient or because it was easier to get a loan from them.
Hoping to migrate consumers away from such expensive options, the FDIC has enacted a number of initiatives including a short-term loan pilot program it launched in February 2008.
As part of the program, a select group of banks have agreed to offer short-term loans of up to $2,500 to low-income Americans.
Wednesday’s survey report was yet another effort to expand consumers’ access to basic financial services, agency officials said.
“By better understanding the households that make up this group — who they are and their reasons for being unbanked or underbanked, we will be better positioned to help them take that first step,” FDIC Chairman Sheila Bair said in a statement.
Tags: consumer credit, FDIC, Pawn Loans, pawnbroker, pawnshop, Payday Loans
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Wednesday, December 2nd, 2009
From NBC 4 Columbus Ohio:
COLUMBUS, Ohio—Federal legislation meant to cut the amount of interest someone can charge at pawn shops is upsetting pawn shop owners.
The Ohio Pawnbroker’s Association is campaigning to try to stop the bills.
The senate and house bills being proposed would cap the interest rate that pawn shop owners could charge on loans to about half of what they charge now. They would also eliminate storage charges of anything in hock.
Pawn shop interest rates have increased 60 percent over a year, but putting something in hock is meant to be a short-time loan with 85 percent of customers paying off their loan within a month.
Under the new plan, on a $100 loan, a pawn shop would only make about 30 cents if someone repaid it within a few days.
“When you come in to borrow money here you don’t have to fill out application fees. There’s no recourse to it. We can’t sue you to get our money back. It’s simple. It doesn’t take a lot of time. It’s a big, big industry. There’s over 200 pawn shops in Ohio alone,“ said Gary Chasin, of Uncle Sam’s Pawn Shop.
The Ohio Pawnbroker’s Association said only about 20 percent of Ohioans ever use a pawn shop and those that do are often the most vulnerable who need money fast.
Tags: consumer credit, Federal APR Rate Cap, Pawn Loans, pawnbroker, pawnshop, S.500
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Monday, September 28th, 2009
Here’s a realistic and well written article about short-term credit sources in the US in the latest edition of Reason Magazine:
Payday of Reckoning
Tags: consumer credit, Consumer Federal Protection Agency, Credit Crunch, Federal APR Rate Cap, Pawn Loans, pawnshop, Payday Loans, Reason Magazine
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Tuesday, September 22nd, 2009
Excerpt from the Las Vegas Sun:
Councilwoman Lois Tarkanian said she isn’t sure whether residents want more pawnshops in the area.
She said her perception of pawnshops used to be that they catered to unsavory elements. But she said her view has changed. And as the economy has worsened, more people who never before used pawnshops are in need of their services, she said.
Tags: consumer credit, Credit Crunch, Las Vegas, Pawn Loans, pawnbroker, pawnshop
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