Archive for the ‘Pawn Ecomomics’ Category
Monday, April 23rd, 2012
From FT Dot Com
By John Murray Brown
The pawnbroking industry is adapting to satisfy demand from more affluent clientele seeking loans secured against works of art, designer clothing, luxury cars and fine wines.
The National Pawnbroking Association, representing 90 per cent of UK pawn shops, estimates the total market grew by 15 per cent last year, with lending to the middle classes accounting for half that growth.
Ray Perry, NPA chief executive, said pawnbroking was no longer a service just for the poor, pointing out that chains had a presence on high streets in many upmarket towns.
“The typical reason given is the customer has fallen behind with the mortgage, or the school fees are due, or is facing a sudden expense like emergency dentistry,” said Michael Ayres, manager of Suttons & Robertsons, which last year opened a branch on Fleet Street in central London.
There are also online providers for those who want more discretion.
“The middle classes don’t like shops [as you could] find yourself standing behind a guy in a hoodie trying to pawn his Nokia for £17,” said Ian Williams, an insolvency lawyer.
Pawnbroker Online, a specialist web-based broker boasts it is “the only pawnbroker that accepts designer clothes and accessories too”.
In a sign of the discretion demanded by its more monied clientele, it promises to “respect your privacy and confidentiality and keep your personal business silent. You will receive no sales calls, no welcome packs and no branded goods from us. You drive the process”.
Copyright The Financial Times Limited 2012.
Tags: consumer credit, Pawn Loans, pawnbroker, Pawnbroker Online, pawnshop, Suttons and Robertsons
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Thursday, January 12th, 2012
From The Star Dot Co Dot UK
It’s the age of the pawnbroker, says Sheffield store’s parent firm
Published on Thursday 12 January 2012
Pawnbroker Albemarle and Bond Holdings has unveiled plans to open 25 new stores and create 300 jobs.
The company, which owns the Herbert Brown store on Sheffield’s Pinstone Street, predicts 2012 will herald the ‘age of the pawnbroker,’ when the industry finally shakes off the misconceptions that surround it.
Chief executive Barry Stevenson says: “With fewer people able to get credit through the banks, pawnbroking has an opportunity to play an increasingly important role in many people’s finances, whether they need some quick cash to get the car through its MOT, or run a business and need some cash to tide them over until a customer pays.
“Unlike overdrafts and credit cards, our customers know exactly what they are paying back and when, which helps them manage their day-to-day cash flow without any hidden charges.
“The pawnbroking industry has worked hard to change its image over recent years and people outside of our existing customer base are now starting to understand how we work and recognise the value of the services we offer – it truly is the age of the pawnbroker. Since the recession, retail rates for high street locations have finally returned to a sensible level which allows us to be where our services are needed.
“However, compared to places like the US, the pawnbroking market here is still drastically under-served.
“We intend to address that through our expansion into new locations and by developing new channels to help people access our services more easily.”
Albemarle and Bond Holdings says the latest expansion will bring the number of stores operating under the Albemarle Bond and Herbert Brown brands to more than 175, in addition to 42 Herbert Brown gold buying sites.
Tags: consumer credit, Pawn Loans, pawnbroker, pawnshop, United Kingdom
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Saturday, January 7th, 2012
From Idaho Statesman Dot Com
BY BILL ROBERTS – broberts@idahostatesman.com
As Ellie Morgan walked into Vista Pawn to sell some sporting equipment, the store was doing a brisk business. One man stood before the counter to pawn a shotgun. Next to him, a woman was selling jewelry. Next to her, a musician recovered his previously pawned guitar.
Morgan, 20, just wanted to get rid of the stuff that was taking up space in her Boise apartment,
“I tried Craigslist,” she said, but found no takers. “I don’t have room to store them.”
People go to pawnshops for many reasons, but they have been using the shops more since the economy started souring four years ago.
As banks have tightened lending, home-equity loans have become scarcer and credit cards have blown past their upper limits, people have been turning to pawnshops for quick cash to make ends meet.
“More affluent people are needing to borrow money,” said Tim Birkle, co-owner with his brother and sister of GNP of Idaho, which owns three Vista Pawn shops in Boise and Nampa, and Airman Pawn in Mountain Home. “Small businesses need to make payroll.”
More middle-class people are walking into Vista Pawn, Birkle said — many because they are now jobless.
The changing times, along with television reality shows popularizing pawnshops, are reshaping the stigma that the shops are places to buy items that represent someone’s broken dreams.
Lending on pawned items grew by 20 percent in 2011 at the Vista Pawn store at 503 S. Vista Ave., Birkle said. Sales were also up 20 percent. Jewelry sales were up 30 percent at Christmas.
“The worse the economy, the better my jewelry,” said Terri Gehring, who oversees the store’s jewelry counter.
One of the biggest drivers in the pawn business is gold, whose price has shot as high as $1,800 an ounce. It has now settled at about $1,600.
Birkle set a large plastic bag of gold jewelry down on his desk and said it represents a four-month collection.
“It’s huge,” he said, though he prefers not to disclose its value.
Nationally, the average loan by pawnshops is $150, nearly double the amount that was recorded in 2008, according to the National Pawnbrokers Association.
About 6 percent of Idaho households have used pawnshops to borrow money, slightly above the national rate of 5.7 percent, according to a 2010 study by the Federal Deposit Insurance Corp. of households that use alternatives to traditional banks.
CONCERNED GROUPS
With the growing business come concerns from consumer groups, who note that interest charged at pawnshops can be as high as 20 percent on a 30-day loan.
That is the standard interest rate at both Vista Pawn and First National Pawn, a Montana chain with 11 stores, including one in Boise and one in Caldwell.
Birkle defends the interest rate, saying it pays for the storage of pawned goods, utilities and other business costs.
In cases of larger loans, typically more than $1,000, Vista’s rate can drop to as low as 5 percent, he said.
Often, those loans are made on small items, like jewelry and electronic games, that don’t take much storage space.
Idaho has no limits on what pawnshops can charge.
Pawnshop operators say their businesses provide a critical lifeline to people with few other options.
There is no credit check. If customers borrow money on items and don’t come back, no one comes after them. The items just go up for sale.
“If someone has bad credit, they can get a loan” at a pawnshop, said Cody Chapple, manager of First National Pawn’s store at 919 N. Orchard St. in Boise.
Pawnshops often buy goods outright. But the more lucrative business is issuing loans against those belongings.
SELL VS. PAWN
Customers often prefer borrowing over selling, because they have a chance to hold onto items that may be their only tickets to cash in the future. Vista Pawn says about 85 percent of its customers retrieve their items after repaying the principal and interest.
Brick-and-mortar pawnshops are starting to see some competition from online companies that let customers do their borrowing without being seen going into a pawnshop.
Pawngo, based in Denver, began its online pawning operation in June and has made $5 million in loans, said CEO Todd Hills. Customers contact the company, describe the item for pawn and get a tentative loan amount from Pawngo. The customer ships the item at no cost to Pawngo. After the company receives the item, Pawngo makes a final loan offer. If the customer accepts it, money is wired into the customer’s bank account.
Pawngo’s Internet efficiencies allow it to charge just 3 percent to 6 percent a month for loans, Hills said. The loans last three months. On a $2,000 loan at 6 percent a month, customers would pay back $2,360.
Consumer advocates say pawnshops can hook users into a cycle of debt, because people with few resources are prone to extending loans if their financial situation doesn’t improve.
While pawning doesn’t carry financial repercussions for people who don’t repay, it is still a form of high-cost credit, said Jean Anne Fox, director of financial services at Consumer Federation of America in Washington D.C.
The image of a pawnshop as a dark, seedy place where respectable people just don’t go is getting a makeover, thanks to a store in Las Vegas.
“Pawn Stars,” a History Channel TV series, follows the buying and selling that goes on in the family-owned Gold & Silver Pawn Shop. The place is brightly lit. The staff are engaging and often quirkier than some of the merchandise that comes in. And while the daily fare for trade in your average pawnshop may not be a 19th century traveling gambler’s case — complete with weapons in a hidden compartment — the series is making pawnshops more accessible to people who once might not have gone inside.
“It give us some credibility,” Tim Birkle, part owner of Vista Pawn. “It has opened the eyes of a lot of people that didn’t know what a pawnshop was.”
Tags: consumer credit, Pawn Loans, pawnbroker, pawnshop, Tim Birkle, Vista Pawn
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Friday, December 9th, 2011
From Crains New York Dot Com
How to get small loans instantly
Some entrepreneurs are turning to pawn shops for financing. Here are some tips to follow.
By Elaine Pofeldt @ElainePofeldt
Published: December 9, 2011 – 10:20 am
When Carol Mortarotti needed money to hire a Web designer for her social media marketing firm recently, she found financing somewhere she might never have looked before the credit crunch: inside of her jewelry box.
Ms. Mortarotti, who has self-financed the Manhattan business she founded in 2008 after leaving a position at UBS in 2007, used about $1,100 worth of jewelry and watches that she didn’t wear as collateral for a loan from Pawngo, an online pawn shop. “I’m so thankful I found them,” said Ms. Mortarotti, who opted against redeeming her jewelry at the end of the loan and simply kept the cash.
Although banks stepped up Small Business Administration-backed lending in the past year because of higher loan guarantees, it remains difficult nationwide for entrepreneurs to get small loans. Some are now turning to pawn shops for financing, fueling growth at Internet-based pawn startups such as Pawngo, a Denver-area company that offers loans in the $1,000 to $1 million range. Officially launched in June, after a beta launch in 2009 under a different name, it now has venture capital backing by Daylight Partners, Access Partners and Lightbank, which was started by Groupon’s founders. The company says it has loaned more than $2.1 million in 46 states.
At Portsmouth, N.H.-based Pawntique, which launched in September and has about a dozen employees, CEO Don Battis, a former manufacturer, said that most of the customers are businesspeople. Pawn industry consultant Stephen Krupnik, a former pawnbroker and author of the book Pawnonomics, says that pawn shop lending to small businesses has gone on for years but that the economic situation may be fueling it now. “In other parts of the world, it’s a different story,” he said. “In China, it’s the No. 1 source of business credit.” While pawn shop loans in the United States average about $80, according to the National Pawnbrokers Association, Mr. Krupnik said it’s not uncommon for U.S.-based brick-and-mortar pawn shops that cater to small businesses to loan $5,000 to $20,000 or more, with dump trucks, cars and other vehicles as collateral.
Ms. Mortarotti raved about her experience in getting the cash she needed, but, as you might expect, borrowing from pawn shops requires some caution. Here are some tips.
Know how pawning works. When you pawn an item, a pawn shop will loan you a certain percentage of item’s value—say, 50% of what it would be worth if you sold it, explains Todd Hills, CEO of Pawngo. You’ll have the option to buy it back by repaying the principle, with interest. “In New York, the entrepreneur is going to pay 2% to 4% on his loan, depending on the size of his loan,” said Mr. Krupnik. Most loans last 30 to 60 days, during which the pawn shop is required by law to have possession of your jewelry or other collateral, says Mr. Krupnik. Sometimes, you’ll have the option to extend the loan after the initial term of the loan. While many pawn shops require monthly payments on your loan, not all do. Pawntique, for instance, doesn’t require you to make payments until after 3 months.
What happens if you can’t pay back the loan? The pawn shop will simply sell your valuables to cover the loan, says Mr. Hills. It won’t hurt your credit rating, says Mr. Krupnik.
Figure out if your valuables are pawnable. Pawn shops look for items that can be easily resold if you don’t reclaim them, such as items made from precious metals. “It is mostly jewelry,” said Mr. Hills, though he also buys luxury items such as watches and designer handbags. Mr. Battis said that when one small packaging company had to scramble to buy supplies to fill a larger order, he loaned the owner $20,000 against some Sterling silver flatwear. About 80% to 90% of customers redeem their goods, says Mr. Battis. “Most people really want their stuff back,” he said.
Consider how fast you need the money. The big advantage of using local brick-and-mortar pawn shops is that the transaction is almost instant. You can bring your item into the store and, after answering some questions about it and filling out paperwork, emerge with money in hand or wired to your bank account. Internet pawn shops such as Pawngo and Pawntique will ask you to email photos of your valuables for their appraisers to evaluate, and, if they pass muster, ask you to overnight them in a prepaid and insured courier pack. That means the speediest loans will arrive the next day.
Think hard about the interest rates. There’s a big downside to pawning: “It is expensive,” acknowledged Mr. Hills, who says it is intended as a short-term solution. Pawngo, for instance, charges 3% to 6% interest per month, with most of its loans lasting from three to six months. So, for instance, one trucking company owner who borrowed $15,000 from Pawngo to cover repairs for three of his trucks paid about $2,000 in interest on that loan over 4.5 months—effectively a little more than 13% of the principal. Then again, he points out, the company was losing money each day its trucks were sidelined. And Mr. Krupnik says the rates on larger pawn shop loans are “absolutely” negotiable.
Find the right pawn shop. According to Mr. Krupnik, many pawn shop owners have gemology or metallurgy degrees and are experienced at appraising valuables. However, it’s worth contacting more than one pawn shop if you’re looking for a loan. When Ms. Mortarotti asked local brick-and-mortar pawn shops what her valuables were worth, they offered her $50 to $100 for one of her watches. Googling for other options, she found Pawngo—and got a $650 loan on the same watch. Also make sure that before you do a deal, the pawn shop owner is licensed, says Mr. Krupnik. Locally, that’s done by the New York Department of Consumer Affairs.
Consider your need for privacy. Internet shops may be a better bet than brick-and-mortar shops if you don’t want members of the community to see you pawning your belongings or are worried about frequenting a local pawn shop in a high-crime area. “It’s much safer than walking the streets of New York with your valuables,” said Mr. Hills.
But borrowing from pawn shops isn’t completely under the radar screen. The pawn industry is heavily regulated by federal and state laws. Pawn shops are required to report their transactions to local law enforcement agencies—along with personal information such as your address—and file forms with the IRS when an individual loan or series of cumulative loans exceeds $10,000, said Mr. Krupnik. That means, for tax purposes, you’ll have to keep just as careful records as you would if you walked into your local bank and got a loan.
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Entire contents ©2011 Crain Communications Inc.
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Tags: Business Credit, consumer credit, Pawn Loans, pawnbroker, Pawngo, pawnshop, Pawntique
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Monday, December 5th, 2011
From WSJ Dot Com
Holidays at the Pawn Shop
By Anne Kadet
New Yorkers have amazing options for holiday shopping. We’ve got charmingly overpriced neighborhood boutiques, designer shops on Madison, endless tchotchke bazaars crowding the parks and big, dumb chain stores lining Fifth Avenue. But those are the obvious options. What about the pawn shops?
They’re everywhere. This city now boasts 390 pawnbrokers—double the pre-recession count. And if you want amazing deals on gifts for the whole family, nothing says “I care” more than wrapping up some stranger’s broken dream and sticking it under the tree.
Aside from the bulletproof pawn windows, Gem Pawnbrokers on Eighth Avenue looks like any mainstream jewelry store—one that also happens to sell used saxophones and $3 DVDs. On a recent afternoon, the bustling shop was decorated with oversize nutcrackers, Santa figurines and plastic wreaths. Kenneth Conn, an executive with the 30-branch Gem chain who had stopped in for a visit, pricked up his ears: “There’s supposed to be holiday music. Ligia!”
Ligia Kourany, the good-humored jewelry manager, cranked up the Bruce Springsteen. “Somebody kicked the plug,” she explained.
Inside Gem Pawnbrokers, sales associate Anthony Lopez, below right, helps Spencer L. Farrow as he browses after trading in an item. The atmosphere was merry. Shoppers crowded the cases gawking at cocktail rings (arranged by price), gold watches and used cameras. Tony Williams, a warehouse manager who had stopped in to do some holiday shopping, showed off the diamond-crusted ring he bought at the shop more than a decade ago. Like many regular customers, he was also a loan client: “You know how many times I’ve paid my rent with this ring?”
Roughly 90% of valuables pawned are redeemed by the owner. The rest hit the display case. Like a bank with a mess of foreclosure properties, the pawnbroker wants to sell the goods ASAP so he can loan the money out again. And that’s not the only reason for low prices at the pawnshop. Pawnbrokers don’t “pay” much for the merchandise to begin with: They’ll typically lend less than $400 on an item worth $1,000.
At Gem, the prices seem high, but the tag price is just the starting point—you’re supposed to haggle. Mr. Conn pulled a $6,149 gold chain from the counter display and asked Ms. Kourany for the rock-bottom figure. She whipped out a calculator and did a little math based on the day’s spot price for gold. “About $3,000, I give it to you!” she said.
And $3,000 was, indeed, a good deal—$43 a gram, compared to $47 a gram for similar chains selling at fly-by-night Internet shops, $66 on Amazon and $80 at Sears. Steve Krupnik, a pawn shop consultant (yes, this is an actual profession), says pawnbroker prices are typically 40 to 60% below retail. Diamond District pawnshops tend to have the most “accurate” prices on jewelry; shops in other boroughs are more likely to offer crazy bargains alongside outrageously overpriced merchandise.
In December, pawn shops are especially eager to deal. They’ve been stockpiling jewelry all year for the holiday rush; come January, they’ll melt the leftovers for scrap. At S&G Gross, the 110-year-old shop just down the street from Gem, owner Gary Gross lifted a $400 gold chain and shook his head. “This bracelet is horrendous. I don’t even know why it’s here. It’s going to get melted for $300.” He’s less willing negotiate on a $150 silver pendant bracelet from Tiffany—the brand name adds value. But his final offer, $140, is still a steep discount from the $350 price on Tiffany.com.
Of course, when buying gifts from a pawn shop, one runs into the problem of presentation. At least one pawnbroker in the city has customers taking home merchandise in black trash bags; this will not impress your wife. But there are work-arounds. At Gem, for instance, folks buying a used Rolex can spend an extra $100 and get a green presentation box that looks a lot like a real Rolex watch box.
Pawn shop aficionados also praise the wide selection. It’s not as good as you’d find in, say, Texas, where pawn brokers sell used washing machines and guns. High rents limit local pawn shops to dealing in small, high-value items like jewelry and electronics. But you’ll find one-of-a-kind items, and a selection that ranges from Walmart charms (for good old Aunt Ruth) to Cartier diamonds (for your own fine self—Mr. Conn says some of his best customers are ladies who come in to buy themselves big, fancy rings).
And pawnbrokers who own their own property can offer a broader selection. At the Bronx branch of NY Pawnbrokers, owner Blaine Messinger deals in wares ranging from bicycles to a $3,500 fur coat of indeterminate species. (“It’s a great coat,” he advised. “It’s got the hood and everything.”)
At first glance, his shop looks empty. Then one realizes that the linoleum-tiled public area is ringed on three sides with floor-to-ceiling security glass shielding a riot of used merchandise: radios, earrings, videos, circular saws, keyboards, televisions, trumpets, DJ equipment, cellphones, iPads and the world’s largest selection of crucifix pendants. Mr. Messinger, a fast-talking gentleman who greeted a reporter with “Hey! Wall Street!” summed up the display with a simple phrase: “It’s eBay, in person.”
Unlike eBay, the pawn shop lets you test the wares, but few were buying. Aside from the man experimenting with the power drill selection, most customers were lined up at the windows to pawn their valuables; one mom was hoping to get a few bucks for her son’s video games. But there were plenty of deals for bargain hunters. Posted prices on used iPhones, cameras and power tools were comparable to those on eBay, and deals, of course, are negotiable. A vintage Schwinn that would run at least $400 in hipster Brooklyn, meanwhile, was selling for $179.
The clincher: If you have trouble paying your bills come January, most pawn brokers shops will happily accept your item back at the pawn window—and lend you precisely half of what you paid. Just try that at Saks.
—Ms. Kadet, who writes the “Tough Customer” column for SmartMoney magazine, can be reached at anne.kadet@dowjones.com
Tags: consumer credit, Holiday Shopping, Ney York, Pawn Loans, pawnbroker, pawnshop
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Monday, November 28th, 2011
From USA Today Dot Com
By Candice Choi, Associated Press
NEW YORK – Pawn shops are beckoning from the shadows.
At a time when banks have shut their doors on those with bad credit, a growing number of U.S. borrowers are pawning their jewelry, electronics and other valuables to make ends meet.
Consumer advocates say the development is worrisome because the interest rates on loans from pawn shops can be as high as 20 percent a month. But pawn shop operators say they provide a critical lifeline to a group with few other options.
“It’s a short-term loan — it’s designed to bail someone out and be done with it,” said Ed Bean, who owns Suffolk Jewelry & Pawnbrokers in Boston.
A common misconception is that pawn shops simply buy the various knickknacks that customers bring in. But the more lucrative aspect of the industry is issuing loans against those belongings. Customers often prefer borrowing over selling as well because it lets them hold onto what may be their only tickets to cash in the future.
What’s key about loans from pawn shops is the lack of judgment; a credit check isn’t required and they don’t have an impact on credit scores. The transaction takes just a few minutes in many cases.
A pawn shop owner simply eyeballs the merchandise a customer brings in and offers a loan amount on the spot. If the customer repays the loan within 30 days, the belongings can be reclaimed. The customer can also opt to extend the loan; many borrow against the same items over and over.
If a customer fails to repay the loan, the shop can put the collateral up for sale.
The National Pawnbrokers Association says its members are reporting record growth as a result of persistently high unemployment, coupled with soaring gold and metal prices. The group says the popularity of the shows “Hardcore Pawn” on truTV and “Pawn Stars” on the History Channel are opening up the industry to a broader customer base as well.
Although the vast majority pawn shops are independently owned, the latest quarterly profits at the three publicly traded pawn store operators reflect the growth the industry is enjoying. Cash America International, Ezcorp and First Cash Financial Services each reported net incomes that were up at least 25% from a year ago, helped by rising demand for loans.
“The opportunities for short-term cash have dried up,” said Eric Fosse, who heads North American operations for Ezcorp, based in Austin, Texas. “Banks have basically abandoned our customer base and their neighborhoods.”
Since the start of the downturn, banks and credit card companies have moved to reduce risk and maximize profits by stepping up their courtship of big spenders with sparkling credit. According to the latest data from credit reporting agency TransUnion, the bulk of credit card offers are still going to those with a credit score of at least 700.
Such economic conditions are pushing more borrowers into the position where their only options are loans from pawn shops, Fosse said.
The average amount of a pawn loan has nearly doubled to $150 since the downturn began. That’s partly because a spike in precious metal prices means gold jewelry is fetching higher prices. But it also speaks to the changing customer base, said Emmett Murphy, a spokesman for the National Pawnbrokers Association, based in Keller, Texas.
That shift toward the mainstream is also the spin behind Pawngo.com, which launched this summer with funding from the founders of Groupon. The site is targeting a more middle-class customer base and has made about $3 million in loans since June. Founder Todd Hillis says the average loan amount is $2,000.
Rather than haggling at the counter of a pawn shop, the site’s customers fill out an online form describing the items they want to pawn (including a picture is optional) and receive an email offer for a loan amount. If they accept, they print a FedEx shipping label and overnight mail the items free of charge. Once the items are received and validated, the loan amount is deposited into the customer’s bank account.
Reflecting the economy’s impact even on upper-income customers, Hillis said customers are mailing in luxury jewelry collections and Louis Vuitton purses.
“It’s not your typical brick and mortar pawn shop where they’re taking in home electronics and video game systems,” he said.
The interest rates are also on the lower end of the industry at between 3 to 6% a month. But the costs still add up. Pawngo loans come in three-month installments, so on a $2,000 loan, customers would pay back $2,360 after three months.
The interest rates pawn shops can charge vary widely depending on the state. In New York City, where the industry trades primarily on jewelry and loans tend to be larger, the cap is 4% a month. In the U.S. South, where loans tend to be smaller with many customers bringing in items such as power tools or lawn mowers, caps can be as high as 20%. Fees for storage could also apply in some regions.
Such costs are why pawn shops should be considered a last resort, according to Jean Anne Fox, director of financial services at Consumer Federation of America in Washington, D.C.
Loans from pawn shops can also hook users into a cycle of debt because those living on tight means are prone to extending loans if their financial situations don’t improve. The risk is not as high as with other types of loans, however, since pawn loans tend to be smaller and are easier to repay, she said.
Loans from pawn shops are also more merciful because they don’t trigger a sequence of financial repercussions, Fox notes.
“It’s a form of high-cost credit,” she said. “But if you don’t repay the loan, you surrender the item and the transaction is over.”
Even though going to a pawn shop may seem expensive to those with good credit, Bean of Suffolk Jewelry & Pawnbrokers in Boston also notes it’s a way for many to keep the lights on at home.
“It’s still the business that it is, and it can’t be picture perfect,” Bean said. “We’re not a genteel jewelry shop. But people can come in and expect that it will be efficient and we will be polite.”
Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Tags: consumer credit, Credit Crunch, Pawn Loans, pawnbroker, pawnshop
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Tuesday, October 25th, 2011
From ABC Action News Dot Com
By: Scripps Howard News Service
Pawnshops, once considered the seamy underside of commerce, have become a mainstream destination for individuals and small businesses looking to cope in today’s economy.
A recent market report by industry research firm IBISWorld in Los Angeles said the pawnshop industry “has thrived through tough economic times,” with a 2.6 percent annual growth rate since 2006.
During that time, industry profit margins increased from 15.5 percent of revenue to 17.5 percent.
IBISWorld forecasts 2011 revenue at $6.1 billion nationwide; it’s expected to approach $7 billion by 2016.
IBISWorld’s analysis flatly states: “Declining economic conditions, including rising unemployment and falling income, have caused cash-strapped consumers to turn to pawn shops for immediate relief.”
The proliferation of pawnshops in the mainstream financial lending/retail sectors has spawned some players decidedly removed from past pawn shop history.
The high-end Boca Raton Pawn outlet in South Florida touts designer handbags, pricey powerboats and eye-popping five-figure watches. In June this year, the founders of the Groupon daily online deal helped launch Pawngo.com, which bills itself as “the first full-service online pawn shop” in the United States.
None of this is a surprise to Stanley Lukowicz III, vice president of Capital City Loan and Jewelry in Sacramento, Calif. His father, Stanley Lukowicz, started the family business in 1992
Copyright 2011 Scripps Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Tags: consumer credit, Credit Crunch, Pawn Loans, pawnbroker, Pawngo, pawnshop
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Thursday, October 13th, 2011
From Mainstreet Dot Com
How to Find Deals at a Pawn Shop
By Jeanine Skowronski
NEW YORK (MainStreet) — Forget scouring thrift stores or garage sales. The real place to score some seriously awesome secondhand goods is your local pawn shop.
“There are a variety of items you can find good deals on at pawn shops,” says Reyne Haines, an antiques/vintage expert who has been featured on PBS’ Antiques Road Show. She explains that many pawn shops sell deeply discounted electronics, fine jewelry, musical instruments and an array of collectibles or antiques that can net high prices in their respective niche markets.
This diverse inventory has to do with a pawn shop’s business model.
“Most pawn brokers are retailers by default,” says Stephen Krupnik, a former pawnbroker and current industry consultant who wrote the book Pawnonomics. Instead, shop owners make a majority of their profits off of the loans they hand on items used as collateral. These pawns are held for a short period of time — typically between 30 to 90 days, depending on state laws — with interest, which also varies by establishment.
Krupnik says the hope is that the pawn’s owner will either make good on or extend their loan and, while pawnbrokers also purchase items outright, a majority of what winds up on their store’s floor is merchandise that was ultimately defaulted on.
These products are typically priced at a steal.
“We discount it at a low price because we want to move the merchandise,” says Seth Gold, co-owner of Detroit’s American Jewelry and Loan pawn shop.
Les Gold, the other owner of the American Jewelry and Loan pawn shop who co-stars with son Seth on truTV series Hardcore Pawn, says they hand out around 500 loans for every five items they buy outright. As a point of reference, their loans initially carry a 90-day redemption window with a 3% per month interest rate. There is also a $1 charge for storage.
“If we can make 10%, we’re happy,” adds Les, as the aim is to quickly bring in revenue to make more loans.
But it’s not just the need to liquidate that guarantees there will be some quality goods on sale.
“If you go into a pawn shop, there is always a lot of great stuff on sale, because owners wouldn’t have loaned money on it if they didn’t think they could make the sale,“ Krupnik points out.
How can you find the best items at the lowest prices? MainStreet asked the experts for a few tips.
Look for lesser-named brands or small-ticket items.
Pawn shop owners all have a certain amount of product knowledge so they can adequately price their loans or broker sales, but Krupnik points out “not all brokers are created equal.”
While most owners will be well-versed in big names like Apple, Tiffany, Cartier or Rolex, they are less apt to recognize or devote a lot of attention to smaller manufacturers, especially if they make lower-ticket items (essentially everything other than fine jewelry or electronics).
For instance, Haines says owners may not be overly familiar with Elgin watches (a brand popular amongst collectors), foreign manufacturers, sterling silver or costume jewelry. They’re also not always going to recognize an antique or vintage item every time they see one.
“A pawn dealer isn’t going to research every vinyl record that comes through the door,” she says.
As such, conscientious consumers can find great buys if they research a niche market they are visiting their local pawn shop.
“Knowledge is power,” Haines says. She suggests joining a collector’s club, visiting auction sites or buying an inexpensive book at the bookstore as way to better familiarize yourself with a particular item if you’re interested in some http://www.mainstreet.com/article/smart-spending/bargains/deals/trash-tr… trash-to-treasure steals.
Negotiate the price.
This is not to say that you can’t get a good deal on the big-ticket items as well. Krupnik says most pawnbrokers price merchandise at around one-third or half of the item’s retail value.
Additionally, unlike a luxury retailer or even a farmer’s market, it is perfectly acceptable to ask for a lower price on an item you are interested in. In fact, it’s almost expected.
“We have price tags on all the jewelry, but these are negotiable,” Seth says. He advises first-time customers to “always throw out a price” on the items they are seriously looking to buy.
Customers can also barter.
“You don’t necessarily have to pay cash,” Krupnik says.
Those who aren’t accustomed to price negotiations can find other tips for how to do so in MainStreet’s ultimate guide to haggling.
Pay attention to the product’s condition.
If it is antiques and collectibles you’re seeking, it is important to check the item completely to make sure it is in good condition.
“Buy something as pristine as can be,” Haines says. This is because scratches, rust, missing paint or missing parts can all “take away a majority of the item’s value.”
Find out the shop’s return policy.
Reputable pawn shops will have a return policy, Krupnik says, so inquiring about its terms and conditions is one of the easiest ways to verify the establishment is on the up and up.
“If [a shop] has no return policy, you should probably refrain from doing business with them,” he advises, unless the item is being sold on clearance or there is a defect the shop owner is telling you upfront about.
For more on how pawn shops have changed recently, check out MainStreet’s Q&A with Rick Harrison, star of The History Channel’s popular show Pawn Stars.
Tags: consumer credit, Hardcore Pawn, Pawn Loans, Pawn Stars, pawnbroker, pawnshop
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Monday, October 10th, 2011
From Seacoast Online Dot Com
By Andrew Leibs
business@seacoastonline.com
PORTSMOUTH — One consequence of tight credit in a stalled economy has been a sudden interest in pawning — one further fueled by reality TV shows such as “Pawn Stars.”
This situation inspired Don Battis to launch Pawntique, an online pawn shop providing short-term loans to upscale clients and small businesses.
“Historically, pawn loans have been for people with no access to credit,” Battis said. “For people who have assets, but need cash, pawning is an option.”
In pawning, a shop accepts an item and loans its owner a percentage of its value — usually around 50 percent, according to Battis. Owners redeem items by repaying the loan plus a fee.
What distinguishes Pawntique from traditional shops is the size of its loans. “We have a $500 minimum loan and go as high as $100,000,” Battis said. “We’re not for people seeking to pawn their iPod or flat screen TV.”
With Pawntique, a Rolls Royce, Rolex or rare art collection is a more likely exchange. Pawning on this scale provides businesses with funding options, Battis said.
“You wouldn’t pawn to meet any long-term business needs,” Battis said. “But if a promised payment gets hung up and you need cash to meet this week’s payroll, pawning assets may be the best solution.”
One scenario Battis described is an antique shop.
“They want to bring cash to an auction, so they pawn something they have,” he said. “Then they go to the auction, buy inventory, sell it and repay the pawn loan.”
Another example might be a landscaper pawning mowers in the fall for cash to fund winter plowing, generating sufficient revenue to redeem the equipment in the spring.
Many businesses are financed with short-term loans like this, Battis said.
One advantage of pawn loans over banks, Battis said, is pawning requires no credit: each loan is fully collateralized.
“If you can’t repay or decide you don’t want the item back, you can just ask the broker to sell it for you,” Battis said. “Not repaying a bank note or credit cards trashes your credit.”
With pawning, Battis said, you give up your collateral, and that’s the end of it — no reporting to credit or collection agencies.
Battis said reality shows such as “Pawn Stars” and “Hardcore Pawn” are changing pawning’s image. “They’re showing people that pawn shops are different than what they thought,” Battis said.
Pawn shops have become popular retail outlets for jewelry and electronics.
“The second business within pawning is reselling items people don’t wish to redeem,” Battis said. “Pawn shops generally have good deals because brokers usually buy items at a good price.”
The pawning milieu inspired Battis, whose background includes manufacturing (he founded Profile Metal Forming in 1986), real estate, financial services and online marketing.
“Like a lot of people, we were fascinated by the TV shows about pawning,” Battis said. “We were interested in Web-based businesses; we have a real interest in inbound marketing, and thought this would be a perfect application.”
Pawntique, which Battis runs with three other partners, has a secure storage facility but conducts all business online. “We make a preliminary offer based on e-mails and digital photos, and if it sounds good to them, they ship the item to us,” Battis said. “We then do a final appraisal, make a final offer, and shoot them out the money.”
Pawntique created an i-Phone app to expedite photo sharing and customer communication with a “click to call” link and online application. The response has been positive, Battis said. “We’ve been getting a lot of interest, a lot of applications; we’ve made some loans, and are quite pleased,” he said.
The Seacoast, Battis said, offers online entrepreneurs access to crucial e-commerce talent and resources.
Battis launched Pawntique through Great Island Technologies, a New Castle-based Web-marketing firm. Battis is a managing partner.
“We’re excited about it,” he said. “We think it’s a new twist on an old idea. “By utilizing the Internet, we’re going to build an interesting business here.”
At a glance
Pawntique
Owner: Don Battis
Phone: (855) 777-6687
Web: www.pawntique.com
Tags: consumer credit, online pawnshop, Pawn Loans, pawnbroker, pawnshop, Pawntique
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