Archive for the ‘Pawn Ecomomics’ Category
Friday, August 26th, 2011
From Business News Daily Dot Com
By BusinessNewsDaily Staff
With almost 30 percent of Americans possessing no checking accounts or credit resources, pawn shops like the Columbus, Ga.-based Money Mizer Pawns & Jewelers are increasingly becoming a primary resource for small loans. That, combined with the rising price of gold and silver, has made pawn shops as popular today as they’ve ever been.
Money Mizer’s CEO Robbie Whitten has learned a thing or two about dealing with customers in his 30 years in the pawn business. He shares a few of those tips with BusinessNewsDaily readers.
Lesson 1 – Never assume by the way a customer is dressed that he doesn’t have any money. I had a guy come in dressed in overalls, shot-out shoes, hair messed up and smelling like he hadn’t had a bath in three days. He was looking at jewelry and no one wanted to wait on him, so I approached the customer and treated him respectfully, and he purchased a diamond ring for $8,500 and paid in cash.
Lesson 2 – Never take a credit card over the phone from someone you don’t know. I sold a Rolex Submariner on eBay back in the early days of eBay and before PayPal. I took a credit card over the phone. The card went through perfectly so I shipped the Rolex. A few days later I received a call from the credit card company ? come to find out the card was stolen. I ended up with no money and no Rolex.
Lesson 3 – Move inventory around in the store, kind of like grocery stores do. It keeps repeat customers from seeing the same old stuff sitting in the same spot time and time again. Also, if you have some inventory sitting for a while and not selling, mark it down and move it – even if you have to take a loss occasionally. As they always say, time is money.
Lesson 4 – Always treat customers kindly and greet them when they come into your store. Be attentive to their needs (talk to them, for god’s sake), be happy and smile. Why do you think Walmart has greeters at the front doors?
Lesson 5 – Be very careful extending credit to a friend or family member without collateral. I learned this lesson years ago when I extended credit on a purchase to a good high school buddy of mine. He never paid a dime and I haven’t seen or heard from him in over 30 years.
Lesson 6 – Your best advertising is word of mouth. We spend approximately $100,000 a year on advertising and it is very effective. However, your customer’s word of mouth is the best advertising in the world. Keep your customers happy and remember the old saying: A happy customer will tell a friend about your business; an unhappy customer will tell 10 friends about your business.
Lesson 7 – Even though we’re in business to make a profit, be charitable on occasion to customers that are truly desperate. Use your judgment, but when a customer asks for a deal or needs a break, show some compassion.
Lesson 8 – Stay ahead of the game in your industry and always be one step ahead of your competition. Be the one that tries new strategies, new advertising campaigns, keep up with new technologies like social media (Facebook, Twitter, LinkedIn, etc.). These are simple things that could turn into profits and new customers.
Lesson 9 – Learn something new every day. Never think to yourself for one minute you know it all. Not a day goes by – even after 31 years in the pawn business – that I don’t look to others in the industry for new ideas, methods, and information to learn something new and make more profits. I’m not bragging, but you can bet your bottom dollar that my pawn shops make 2-3 times more in profits than competition in my markets.
Money Mizer currently has three corporate-owned locations, in Columbus, Ga., and Phenix City and Dothan, Ala., as well as one franchised location in Auburn, Ala. After launching its franchise program in 2008, the chain expects to sell 10 to 15 franchises in 2011, with 150 locations open by the end of 2015.
Tags: consumer credit, Money Mizer Pawns & Jewelers, Pawn Loans, pawnbroker, pawnshop, Robbie Whitten
Posted in Pawn Ecomomics | 1 Comment »
Sunday, July 24th, 2011
From Star-Telegram Dot Com
At DFW pawnshops, business isn’t all bright and shiny
By Jim Fuquay
After Michael Meyer got out of the Marines and then Texas A&M University with a degree in history in 2008, he took a career path less traveled: He went to work for an EZ Pawn store.
By January 2010, he put his experience behind the counter to good use when he and his father, Ken, bought an existing pawnshop on McCart Avenue in south Fort Worth. They renamed it Purple Heart Pawn & Gun, a nod to the medal Meyer received after being wounded in Iraq. Now, if conventional wisdom is right, he’s part of a business built for recession, one that becomes supercharged when other consumer markets run out of gas.
Well, not exactly, Meyer says, though there’s no denying that pawnshops are in the spotlight.
They’ve got their own TV show, the History Channel’s Pawn Stars, now in its second season and one of the most watched cable programs, attracting more than 7 million viewers, according to the Nielsen ratings. The show features three generations of the Harrison family that run Gold & Silver Pawn Shop in Las Vegas, where they attract plenty of bling and valuable oddities.
On Wall Street, the publicly traded pawn chains, including Fort Worth-based Cash America International and Arlington-based First Cash Financial Services, have become the darlings of investors in the past year, with their share prices more than doubling the S&P 500′s 25 percent gain in that time.
And gold’s long run, which saw it top $1,600 an ounce last week, has helped boost pawnshops. Jewelry makes up a big share of their merchandise, and the higher prices have helped to swell the value of inventory and loans.
Is this a guaranteed counter-cyclical business?
“What the public thinks and what I actually see are not the same things,” said Meyer, 27. “Business is good, but contrary to what people believe, we don’t necessarily do great business when the economy is down.”
“Pawn has two sides, selling and loaning,” said Meyer, who got interested in pawnshops after working at one during his senior year at A&M. “In one instance, our loans are up, we’re definitely making more short-term loans. But we’re selling less.”
At First Cash, which operates 646 outlets, “60 percent of our revenue is retail sales” of pawned merchandise, Chief Financial Officer Doug Orr said. “A lot of our inventory is gold jewelry, and that’s a tough sell in this economic environment.”
And while Cash America and First Cash stock have done well in the past year (as well as shares of Austin-based EZCorp, owner of the EZ Pawn where Meyer got his start), they’ve had their rough spots during the financial crisis. Both Cash America and First Cash fell more than 50 percent by the time the market bottomed out in early 2009, and EZCorp wasn’t far behind.
Even the rise in gold prices is not all positive.
“All it does is increase the competition. Everybody and his brother now buys gold,” said Alton Braxton, manager of Trader Jim’s Pawn Shop in east Fort Worth.
The big chains and the rest
The big chains are certainly doing well financially. Just last week, Cash America and First Cash announced higher revenues and profits.
But that’s not necessarily representative of the business in general.
The publicly traded pawn chains “represent about 10 percent of all pawnshops,” said Emmett Murphy, spokesman for the National Pawn Brokers Association, which moved its offices to Keller three years ago.
“Their business models are more complex,” entailing foreign operations and payday lending that most independent pawnshops don’t get into, Murphy said.
For example, Mexico accounts for the majority of First Cash’s business, two-thirds of its stores and nearly all its growth. And Cash America gets slightly more revenue from payday loans than it does from merchandise sales, and nearly twice as much as from pawn fees.
“Most pawn brokers are mom-and-pops, or small chains,” Murphy said.
If the average pawnshop is a small operation, so are the transactions. According to the association, the average pawn loan in 2010 was about $100, up from $80 the previous year.
Meyer said his average loan is around $100, whereas Orr said First Cash’s average is $170 at its U.S. stores and $70 in Mexico.
‘Workingman’s bank’
Murphy said pawn loans tend to be larger in states that mandate lower interest rates and where more of the merchandise is jewelry. New York state, for example, limits pawn loans to 4 percent a month, plus a $10 service fee.
Texas allows rates as high as 20 percent a month, a rate that’s fairly common. The rate comes down as the loan amount rises, a mechanism also used in other states, including Oklahoma.
For example, Texas’ allowable rate falls to 15 percent a month on loans from $189.01 to $1,260, 2.5 percent on loans from $1,260.01 to $1,890, and 1 percent a month for loans above that.
But Texas pawnshops don’t tend to make many big loans, Meyer said.
“We’re the workingman’s bank, where you can get $60 to get a fill-up,” said Jack Stallings, owner of Texas Best Pawn & Jewelry in west Fort Worth.
There’s some disagreement over whether the customers of pawnshops are changing significantly because of the recession.
“We’re seeing more middle-class people, and even small businesses like restaurants,” Murphy said. Meyer also said he sees some more affluent customers than he did when he first got into the business.
But Dan Feehan, CEO of Cash America, said he doesn’t think pawn customers have changed much. If there’s been a change, he said, it’s in the clientele for the company’s payday loans, which are short-term advances backed by a customer’s postdated check, rather than a piece of merchandise, as in a pawn.
“The theory is that folks have gotten squeezed out of more traditional credit markets,” Feehan said. “But our core customer base” in the pawn operation, he said, has remained fairly consistent.
Tags: consumer credit, Credit Crunch, DFW, pawnbroker, pawnshop, Purple Heart Pawn
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Tuesday, July 12th, 2011
From Go Banking Rates Dot Com
Are Pawn Shop Owners the True U.S. Economists?
By Casey Bond
Just about every industry took a hit from the recent recession and most businesses are still struggling to rebound. That is, except for pawn shops. Interestingly enough, they have actually been on the upswing ever since our economy took a turn for the worse. In both the good times and the bad, however, pawn shop owners are down in the trenches with their customers–typical Americans like you and I–which may give them the most authentic and uncensored look into the true state of our economy.
So if you’re wondering whether the U.S. is really on its way toward economic recovery or if we’re doomed to keep our belts tightened for years to come, you might want to visit your local pawn shop to get the real answer.
How Pawn Shops Work
Once viewed as a seedy location to unload stolen goods and hock valuables for gambling money, pawn shops have been cleaning up their image and becoming the go-to among middle- and even upper-class Americans for discounted goods and small loans.
Their new found popularity has even sparked a wave of reality shows, including the History Channel’s Pawn Stars, in which viewers can watch the shop’s employees haggle over everything from Superbowl rings to buried treasure. But a pawn store can provide much more than mindless entertainment and there’s plenty these establishments have to offer the everyday consumer, too.
Here’s how a pawn shop operates: Let’s say you need a loan, but don’t have the credit or bank account necessary to get one (or you simply want an alternative). You can take a valuable item you own to a pawn shop and offer it up as collateral. The pawnbroker will then lend you however much he or she deems that item to be worth. You both agree on a term–usually, 30 days–after which you come back to repay the money, plus interest, and have the item returned to you.
Now what if you can’t pay back your loan? The pawn broker can put your valuable item up for sale in their shop with the goal of selling it to recoup the money they loaned you (and hopefully make a profit). You don’t get reported to the credit bureaus or end up with bill collectors on your tail, you just give up the item you pawned.
You can also sell items to a pawn shop if you’re interested in straight cash rather than a loan. These days, a lot more people are interested in both.
Living in a “Pawn Shop Economy”
While there are more than 13,000 pawn shops throughout the country, they are mostly small, privately-owned businesses that do not report their earnings publicly. That makes this industry extremely difficult to track. Even so, the three publicly-traded pawn companies have recently reported significantly increased earnings.
For an industry that thrives on making short-term loans and selling goods at a discount, it’s a strong indicator of the financial times in which we live.
However, it isn’t just an increase in profits that has contributed to the idea pawn shops serve as an economic barometer. Pawn shop employees get a first-hand look at current trends in consumer borrowing and spending, as well as various industry ups and downs.
“We went through two solid years where we had an increase in loans. And I could see the construction business grinding to halt by all the tools on my sales floor,” explains Westside Pawn manager, Susan Sherrod.
A more affluent crowd has been coming through pawn shop doors to join the usual suspects these days, too, hoping to pawn and sell nicer stuff. As Pat Schneider writes for The Cap Times, “unlike payday loan stores, which have the feel of banking branches, a pawn shop’s eclectic mix of items and their owners offers a dramatic window into life during the economic downturn.”
Pawn Shops Serve as Alternative to High-Interest Payday Loans
Payday loans have become much more popularized as a result of the recession, which left a huge number of people with reduced or no income, increasing the demand for short-term loans. Unfortunately, it also left these same people with damaged credit. Combined with tightened lending standards, it has become harder than ever to obtain a loan.
So it’s pawn shops that have come through to serve the needs of the unemployed, unbanked and otherwise down and out.
Additionally, pawn customers can enjoy the fact that there isn’t any credit check involved in getting a loan, and if the loan can’t be repaid, there are no long-term repercussions. Not to mention, it’s hard to obtain a loan for $60.
So whether you’ve hit hard times and need some cash or are simply interested in the fate of the U.S. economy, you may find that what you’re looking for isn’t at a big bank, but the local pawn shop.
Casey Bond has a long professional history in the finance industry. She worked as an assistant in a successful financial planning firm for many years while obtaining her B.A. in English. She then went on to obtain a degree in Publishing and was eager to change career paths.
That’s when Casey joined the Go Banking Rates team, ready to meld her interest in finance with her passion for writing. Now she strives daily to bring readers the most compelling and topical banking information while battling a personal addiction to shoes and handbags. She is making progress and takes it one day at a time.
Tags: consumer credit, Economic Indicator, Pawn Loans, Pawn Stars, pawnbroker, pawnshop
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Monday, June 20th, 2011
From Newsweek Dot Com
It’s a Hot Time to Be a Pawn Star
Hocking your diamond ring used to be shameful business.
Now everyone’s doing it.
by Gary Rivlin
To gauge the state of our economy, you could talk to the economists and other so-called experts. Or you could attend the annual pawnbrokers’ convention, as I did, held last week at Caesars Palace in Las Vegas. There, I met Lee Amberg, his face sunburned from competing in the annual golf tournament that these days opens every Pawn Expo.
A 23-year industry veteran with a pair of pawnshops in suburban Chicago, Amberg says he could tell as far back as 2006 that hard times were coming. “Suddenly we saw our demographic expanding,” he says. “We had more customers coming to us from middle-class communities and even upper-middle-class communities. We saw the erosion of the economy before you were even reading about it.”
Except, who listens to a pawnbroker? “We have our thumb on the true pulse of the economy,” Amberg says with a sigh, “but we’re laughed at or ridiculed because we’re in the pawn business.”
These are fat times for the pawn industry—in no small part because these are hard times for much of America. Pawnbrokers are lending money to a new breed of customer—the kind who drives up in a sports car, lugging a large flat-screen TV to hock—and it’s not like their traditional clientele are any better off than they were a few years ago. Pawn is even hot in the popular culture, as reality TV has spawned no less than three shows starring pawnbrokers.
At first glance, the Pawn Expo could have been any trade show of its kind: booths for exhibitors selling their wares (diamond and gold buyers, mainly), breakout sessions for the more studious conventiongoer (“10 Successful Steps to Becoming a Watch Guru”), boozy parties at night. And the brokers—1,300 attendees in all—made for a friendly, casual bunch, dressed in resortwear for the 100-degree Vegas heat. Still, most people think of the corner pawnshop as a forbidding place, dingy and depressing and smelling something like their grandmother’s attic. “I would describe image as our biggest challenge,” says Kevin Prochaska, who took over as president of the National Pawnbroker Association at this year’s meeting.
But changing that image is no easy task for these lenders of last resort. “If someone is coming to us, that’s the definition of a bad day,” a pawnbroker named Kathy Pierce told me. Apparently, there have been a lot of bad days for the people living near the two stores she and her husband own in central Illinois. The loan volume at both “is higher than it’s ever been,” she says.
If you’re a fan of the hit show Pawn Stars, you might think that what pawnshops mainly do is buy used stuff. But the vast majority are really loanmakers: that watch or wedding ring (usually the same watch or ring hocked the last time) serves as collateral for a loan that usually lasts from a few weeks to a few months. The amounts borrowed are typically small—$100 or less, just enough to make ends meet until the next payday. Four out of every five customers successfully pay off their loan and retrieve the item they’ve hocked.
But a pawn loan isn’t cheap. The fees charged work out to an annual interest rate of between 50 and 250 percent a year, depending on the state. Prochaska, the association president, defends the high interest rates by noting that “a lot of overhead goes into every loan.” That’s because pawnbrokers must store whatever a customer brings in—jewelry, mostly, in big cities, but plenty of weed trimmers, fishing poles, and power tools in less-urban areas. And there’s no guarantee that the pawnbroker will ever be able to sell the items if the borrower defaults. For some pawnbrokers, the sale of forfeited items has accounted for half their revenue, and a lousy economy means they get stuck with more inventory.
Yet for most pawnbrokers, the spike in loan volume over the past few years—and the corresponding increase in the fees they collect—has more than made up for the decline on the retail side. “It’s an awesome time to be in the lending business,” says Nancy Martin, a pawnbroker from North Carolina who has had her own shop since 1981. “Whether you’re talking about our traditional customers or the new people coming in the door, people are really hurting.”
Tags: consumer credit, Economic Indicator, Gary Rivlin, Las Vegas, National Pawnbrokers Association, Pawn Loans, pawnbroker, pawnshop
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Friday, June 10th, 2011
From Wallet Pop Dot Com
Groupon Founders Get Into Online Pawn Shop Biz
By Barbara Thau
The founders of the nation’s biggest daily deal, group-buying site are getting into the pawn shop business.
Groupon founders Eric Lefkofsky and Brad Keywell, who now run investment firm Lightbank, have partnered with online pawnbroker Internet Pawn to launch Pawngo, an online pawn shop.
The site aims to redefine the old fashioned brick-and-mortar pawn shop in the online space by offering customers “a more practical and affordable option to credit card loans and payday lending to get cash quickly without going into debt,” the company announced in a statement.
Pawngo customers can use the gold, jewelry, watches and valuables they own as collateral to secure a short-term loan. Similar to a traditional pawn shop, customers are also offered the option to sell their valuables for a slightly larger amount without interest payments.
“Financing from Pawngo can help fill gaps in cash flow, [helping consumers] pay for emergency purchases like major auto or home repairs or braces for a child,” Lightbank said in the statement. “Once you’ve paid back the loan, your items are shipped directly back to you quickly and safely.”
Here’s where Pawngo differs from traditional pawn shops: The site offers loans based on an item’s current market value for up to six months at 3% to 6% monthly interest rates — a better deal than brick-and-mortar pawn shops, which can charge as much as 20% interest per month, Lightbank added.
What’s more, Pawngo customers can nab a loan ranging from $250 to up to $100,000 in 24 hours — no matter the state of their current finances or their credit history, the company said. And because the transaction is done online, the pawn shop process is discreet and private.
Indeed, Pawngo appears to have set out to rehabilitate the pawn shop’s sordid image for the online space. The Pawngo system “eliminates the intimidating feeling walking into a brick-and-mortar pawn shop in a seedy part of town,” the company noted in its statement.
Here’s how the site, which has yet to officially launch, works:
Customers go on to Pawngo.com and enter a description of the item or items, send a digital photo of the piece — if available — and enter their contact information. No credit card information or Social Security number is required. Pawngo will send the customer a preliminary loan offer or buy estimate within a few hours.
If the customer accepts the offer, Pawngo users can print an overnight, pre-paid FedEx shipping label to send the item directly to Pawngo’s evaluation lab. Once the item has been received, a Pawngo representative will contact the customer with an exact item evaluation and an offer. If the customer accepts the offer, their item is kept in Pawngo’s vault, and the site wires the customer money to their bank account.
The launch of Pawngo is clearly a sign of the times, Craig Johnson, chairman and CEO of retail consultancy Customer Growth Partners, told WalletPop. The economic downturn, Johnson says, has put that many more people into the “low income or temporarily low income” category, people who could find that this new service is just what they need to get them past the rough spots.
Tags: consumer credit, Groupon, Internet Pawn, Pawn Loans, pawnbroker, Pawngo, pawnshop
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Wednesday, April 27th, 2011
From Bnet Dot Com
By John Thedford, CEO, Family Financial Inc., Winter Park, Fla.
When I first launched a chain of pawn shops called La Familia Pawn in 2009, the local communities and banks we approached mistrusted us because of the industry had such a negative image. On top of that, we faced stiff competition: Three established, publicly owned companies collectively owned thousands of pawns shops across the nation. Here’s how I’ve managed to not only move past our industry’s bad reputation, but also outpace the competition.
Overcoming the image problem
Pawn shops have a bad reputation for predatory lending and dealing in stolen goods. A lot of people assume that pawn shops lend money to individuals whom they know can’t pay back the loan, so that they’ll be forced to forfeit the personal items that they’ve pawned as collateral.
I had previously owned a company that operated 70 pawn shops across the Southeastern United States, and I found that the industry’s bad image made it difficult to secure bank loans or lease properties. The truth is, the bad reputation is unfair: 80% of loans made by pawn shops are paid back, and less than 0.1% of all pawn shop transactions deal in stolen property. So when I launched Family Financial, I wanted to turn the negative stereotype on its head.
Looking the part
People tend to think of pawn shops as dirty hole-in-the-wall places with sketchy employees. In response, we do everything we can to keep our stores and employees looking as presentable as possible. An employee does a parking lot sweep and picks up trash outside the store every hour. We restripe our parking lot lines once a month and repaint the outside of our building once a year. Chipping paint and dirty parking lots bring to mind all the other nasty things people associate with pawn shops, and we want to rise above the stereotype.
We also have a dress code. Male employees must wear long sleeve shirts and ties. Female employees have more choices, but the key word for everyone is “professionalism.” When we interview candidates, we look for people who are not only hardworking team players, but also clean-cut and professionally dressed. In order to help ensure that our employees meet these requirements, we pay significantly above minimum wage. We’ve found the more you pay your employees, the more you can expect from them.
These are simple and cost-efficient steps but they’ve helped us earn the trust of the working and middle-class families that we serve.
Engaging with the community
The most effective way to win over suspicious communities is to get involved in them. Right now the CFO and I are volunteering to teach an eight-week session on how to be an entrepreneur at local middle schools. Every employee at my company — myself included — volunteers some weekends to read out loud to middle school students. We don’t force our employees to do it, but we do hire people who demonstrate a genuine desire to give back to the community. Sometimes customers will come into our store and say “Oh! You were reading to my kid last week in class.”
In the past, we have teamed up with the Orlando Business Journal to sponsor underprivileged youth in a program that pays for part of their college tuition. Next year we plan on donating $75,000 to the cause. These practices are good for the community, but they’re good for the business, too: Every time we win over a community it makes it easier to go to a bank and get a loan or convince the next community to allow us to lease the property for another store.
A new perception
Our measures have helped change people’s mind about the industry — or at least about our company. We no longer have trouble getting bank loans, and we now have 18 stores in Florida and Puerto Rico and project $25 million in annual revenue for 2011. I believe our strategy has been so effective because we aren’t pretending to be something we’re not: We’re simply taking steps to show people what kind of business we actually are.
John Thedford is the author of Smart Moves Management: Cultivating World Class People and Profits, Emerald Book Co., 2010.
–As told to Harper Willis
Tags: consumer credit, John Thedford, La Familia Pawn, Pawn Loans, pawnbroker, pawnshop
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Tuesday, March 22nd, 2011
From Theaustralian Dot Com Dot AU
THE surging price of gold is prompting a stampede by Indians to pawn their jewellery and gold coins as a way of raising cash for cars, televisions and other consumer goods, according to the country’s biggest lender.
Demand for cash loans using gold as collateral – a regular banking service in India offered at thousands of branches – is exploding at 37 per cent per year, according to HDFC Bank.
Indians are expected to take out loans worth nearly $US12 billion this year by pawning their gold, up from $US2.5bn in 2007, Biju Pillai, the executive vice-president at HDFC, said.
“It’s increasingly popular,” he said, adding that Indian banks and specialist lenders were scrambling to cash in on the trend, which is being driven by a decade of rising prices and India’s huge private stockpile of gold.
Worn as rings, bracelets and neck-laces or stashed away in cupboards and safes, Indians are believed to hold about 18,000 tonnes of gold – worth about $US900bn at present prices.
That is more than twice the size of the combined 8100 tonnes held by the US Federal Reserve at Fort Knox, Kentucky, and a vault beneath the Federal Reserve Bank of New York.
“Gold is an asset that is available to virtually all customers in India, rich and poor. People are using it for buying consumer goods, cars or even just to buy more gold,” Mr Pillai said.
Ajay Mitra, managing director of the World Gold Council in India, said: “Gold is in our DNA. We have been using it for 5000 years and Hindu mythology says the world was created from a golden womb which exploded … The word gold is interchangeable with the word auspicious.”
With a growing population of 1.2 billion people, India’s insatiable demand for gold is driven chiefly by wedding gifts – which account for about half of all purchases.
It is the high level of gold ownership, combined with a great awareness and interest in gold prices, that is driving the popularity of gold loans as an easy way to raise cash.
Gold loans are about 5 per cent cheaper than regular bank loans and require less documentation to complete, Mr Pillai said.
Rising world gold prices, which touched a record $US1437 per troy ounce on March 2 as investors sought safe havens after the earthquake and tsunami in Japan, are also pushing up the size of the loans available to Indian gold owners.
Mr Pillai said that traditionally the market was dominated by small-scale pawnbrokers, but as India’s economy expanded at a brisk 8 per cent annual rate, the gold loan market was becoming increasingly sophisticated, with the country’s top banks and a string of specialist chains, such as Mannapuram Gold Loans, entering the market.
Mr Pillai also said that Indians were gradually overcoming a cultural stigma attached to pawning gold, which has been reinforced by countless Bollywood films depicting it as a humiliating last resort.
“There is a change of mindset under way,” he said. “Slowly but surely, people are realising that it is a smart option.”
Tags: consumer credit, Gold Prices, India, Pawn Loans, pawnbroker, pawnshop
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Friday, February 25th, 2011
From Charlotte Observer Dot Com
In bad economy, pawnshops are ‘poor man’s bank’
By Andrew Dys
adys@heraldonline.com
Kevin Renegar had a choice.
The struggling painter and home remodeler in an economy that has almost no construction work, a father of two kids ages 3 and 12, could keep his nice digital camera at home and take pictures of his kids.
Or he could pawn that camera and buy groceries.
Wednesday, Renegar left World Record Holder Pawn with a pawn ticket and cash for food.
“My kids gotta eat,” Renegar said.
“We are the poor man’s bank,” said Doug Mason, owner of Rock Hill Pawn Shop. “People are out of work. They need money short-term to pay bills. That’s where we help. I help anybody I can.”
Pawn shops offer short-term loans on goods. The shop owner takes the goods as collateral, gives the customer cash, and holds the merchandise for a fee. If the person can get the money together later, he pays back the loan – with interest – and gets the stuff back.
At Mason’s store Wednesday morning, a guy walked in needing money for bills, so he pawned a compound bow used for hunting and left with money to keep the heat on. He came after a man named James Tweed, an unemployed carpenter from York, brought in 16 DVDs and a circular saw. Tweed didn’t pawn the stuff: He sold it.
For $16.
“Gas money,” Tweed said. “It has come to this. Selling movies and my saw for gas.”
Pawn shops, strictly regulated by the state and required to notify law enforcement of all transactions, are at times the last resort.
The retail selling of goods – from jewelry to electronics and everything in between – is good, local pawn operators said. But the increase in pawning of items for short-term loans, with so many people needing money for emergency bills, is emblematic of the struggling economy.
“People have nowhere else to turn sometimes,” said Mason of Rock Hill Pawn Shop. “Sometimes the loan I can give someone keeps the lights on for their kids.”
Jake and Teresa Silcox opened World Record Holder Pawn on Valentine’s Day and have been “shocked” by the demand and foot traffic in just over a week in business.
“I had a lady in here this morning who sold her wedding rings,” Jake Silcox said. “People are just really struggling.”
Renegar had to fill out forms with the serial numbers of the camera. He had to prove who he was, and even have his fingerprints put on a card. He went through all that, pawning his camera, so his kids could eat Wednesday night.
“I came to a pawn shop today because I had nowhere else to turn,” Renegar said. “The kids come first.”
Tags: consumer credit, Credit Crunch, Pawn Loans, pawnbroker, pawnshop
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Wednesday, February 16th, 2011
From People Daily Dot Com Dot CN
Small, Mid-Size Companies Turn to Pawnshops for Loans
Small- and medium-sized companies in China are turning to pawnshops for quick and easier money-borrowing services, even at much higher costs, as they are finding it difficult to get bank loans due to tight lending policies.
The central bank’s move to raise the benchmark interest rate made it harder for the small- and medium-sized companies to borrow money from banks, and this is providing a boost for the pawnshops, Han Li, a legal adviser from Beijing Pawn Trade Association, told China Daily.
Many small- and medium-sized companies pledge cars as well as real estate, including offices, shops and factories, to resolve short-term cash-flow problems.
“The cost for pawning privately owned houses is 3.2 percent of the amount borrowed for each contract period, and for companies’ real estate can be a maximum of 4 percent in our pawnshop,” said Huang Ronghua, a manager from the real estate business center of Baoruitong Pawnshop, a major chain in Beijing. The regular period for a pawn contract is 30 days.
In Huaxia Pawnshop, borrowers pay at the rate of 3.2 percent for both privately owned and company-owned real estate for each period. The rate for pledging cars is as high as 4.5 percent.
The People’s Bank of China (PBOC) raised the one-year benchmark interest rate by 0.25 percentage points and adjusted the one-year loan rate to 6.06 percent on Feb 8.
That means that the bank loan rate for a month is only about 0.5 percent, while the borrowing cost from pawnshops is about six times higher.
Usually companies can get money in less than three days after they provide property-ownership certificates to pawnshops. For car pawning, it is less than 12 hours. faster than the bank’s credit assessment procedures.
“Lending money to small- and medium-sized companies has become the major business of our pawnshop, and the deal volumes are much higher than personal products pawn over the past few months,” said Chen Yuan, manager of the Marketing Department of Baoruitong Pawnshop.
According to Han, the legal adviser, the money that pawnshops lend comes from bank loans and their own funds, and the amounted loaned should not exceed the pawnbroker’s registered capital. Therefore, pawnshops earn a good margin from their business.
Some banks, including the China Agricultural Bank and the Bank of Beijing, are the cooperative business partners of Baoruitong Pawnshop. Huaxia Pawnshop is in partnership with banks including the Industrial and Commercial Bank of China and Hua Xia Bank.
“Without professional risk-management systems, pawnbrokers in China have higher risks than banks. Pawnshops should improve risk-management capabilities to provide better financial services to small- and medium-sized companies,” Han added.
China Daily
Tags: Beijing Pawn Trade, consumer credit, Pawn Loans, pawnbroker, pawnshop, Peoples Bank of China
Posted in Pawn Ecomomics | 3 Comments »
Thursday, February 3rd, 2011
From Men Media Dot CO Dot UK
Pawnbrokers in the north west have seen a rise in demand post-Christmas as company owners look for a short-term cash injection to settle quarterly VAT and other tax bills or to meet credit card payments.
Jonathan Caplan, a partner at Manchester-based online pawnbroking service Sparkle Money, said: “A lot of our customers are business owners who want a quick fix to cash flow problems.
“We recently got a very rare viola worth £200,000 and one customer came in with a Rolex and personalised number plates. Because the banks aren’t willing to help out, people are cashing on on their high value goods.
“Last month was certainly busy, a combination of people paying off their credit card bills, meeting tax deadlines or just simply seeking cash flow.
“Many of our customers have cited not receiving enough help from banks as one of the reasons they are using services like ours.”
Sparkle Money, which targets clients who do not want to be spotted at a traditional pawnbrokers, arranges loans of between £500 and £100,000 within 48 hours, secured on valuables such as jewellery, watches, antiques, works of art and even cars.
James Bowes, a jeweller and pawnbroker in Stockport, said it had seen an increase in business during January following overspending at Christmas as well as small business owners looking for a cash injection.
The family-run business, which has also seen an increase in middle-class customers, said its pawnbroking services grew 25 per cent last month compared with January 2010 .
Paul Bowes, whose great-grandfather founded the business in 1880, said: “January is traditionally the busiest time of the year for pawnbrokers. Customers have overspent at Christmas and need that extra helping hand until pay day whereas others are facing annual tax bills.
“We have seen an increase in clients who are small business owners or are self-employed. They need a short-term cash flow boost, particularly when hit with large bills such as their quarterly VAT payments.”
Tags: consumer credit, James Bowes, Pawn Loans, pawnbroker, pawnshop, Sparkle Money, United Kingdom
Posted in Pawn Ecomomics | 1 Comment »
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