Posts Tagged ‘pawnbroker’
Tuesday, September 27th, 2011
From NWI Times Dot Com
How a Pawn Shop Works
According to Ameripawn pawn shop Owner Greg Engstrom, pawn shops have always filled the gap in loan providers. But today, loan seekers are going through one of the most difficult lending periods in recent history, and pawn shops are willing to make loans other lenders wouldn’t.
“A lot of people need the pawn shop right now, and we’re the only lender that wants to lend to them,” Engstrom says.
So how exactly does a pawn shop work? The meaning of the word ‘pawn’ is a loan, and so pawn shops are in the business of not just buying people’s possessions, but mainly lending people money.
“We work in collateral loans, which aren’t based on your previous credit,” Engstrom says. “About 75% of our business comes in loans, and 25% is from people just selling stuff.”
If you’re considering purchasing or pawning at a pawn shop, Engstrom recommends doing some research on the items in question. Researching will let you know the most accurate price for the item and help you in the bargaining process.
“We do research on every item we deal with, and we try to be experts on everything in the store,” Engstrom says. “But really, we’re just scratching the surface, and sometimes we price things incorrectly. It’s always a good idea to research and ask to make sure.”
If you want to pawn something, you should know exactly how much money you need to borrow before going into the pawn shop and be prepared to work with the pawnbroker to make sure the loan for your item is accurate.
“If you need $100, and the value of the thing you brought in is $90, then we can sometimes stretch it for you,” Engstrom says. “But if the gap is too big, you’ll have to add something to it.”
Engstrom says that because it’s durable and can last generations, jewelry is the number one item in a pawn shop. Jewelry is often the most valuable thing a person owns, which is why it’s also one of the most pawned items. Jewelry styles change often, too.
“If people aren’t wearing yellow-gold, they can come in and find something in white gold,” Engstrom says.
But pawn shops have much more than just jewelry; you can find great deals on household tools, lawn equipment, video games, TV shows, musical instruments, antiques, golf clubs, an endless list of electronics, and many items you wouldn’t expect to find at a pawn shop. Engstrom recommends that if you’re on your way to purchase something new, stop by a few pawn shops first to see if they have it.
“People would be surprised at how diverse the items in a pawn shop are,” Engstrom says. “We deal in whatever comes in.”
Engstrom notes that Ameripawn’s staff often knows even more about the items in their store than normal retailers because they must do extensive research on each item. Pawn shops will also bargain with you for a fair price.
“We test everything that comes in, and if a customer wants to try it out, we’ll help them hook it up in the store,” Engstrom says. “We try to go above and beyond to help someone find what they’re looking for.”
At Ameripawn, you can test CDs right by the rack in a CD player with headphones. Many pawn shops, including Ameripawn, will also hold items and put things on layaway for you. Engstrom also says Ameripawn works with the police and has procedures in place to make sure they don’t buy items which they suspect might have been stolen.
Tags: Ameripawn, consumer credit, Greg Engstrom, Pawn Loans, pawnbroker, pawnshop
Posted in Pawn Ecomomics | No Comments »
Wednesday, September 21st, 2011
From RGJ Dot Com
Dayton Valley Pawn
If you’d enjoy meeting a man who really
loves his work -drop by Dayton Valley
Pawn and say hello owner, Gary Barwig.
Barwig says, “It’s like Christmas every day
for me. I never know what’s going to come
through that door!’
While living in Southern California, he
owned several second-hand stores. But,
this is the first time he has owned a
pawnshop and is able to offer loans to his
customers.
Dayton Valley Pawn first opened in the
Occidental Square in Dayton three and a
half years ago, but when a great location
was available for lease on highway 50
across from Terrible’s casino he jumped at
the chance to relocate his shop last year.
Dayton Valley Pawn has a wide selection of
new and used firearms, specializes in
buying and selling gold and silver jewelry
and has a large inventory of other items for
sale.
One of the perks for the pawnshop’s
customers is the ability to shop on-line at
http://DVPawn.com -just scroll down to the
Ebay site, click on it and Dayton Valley
Pawn’s store appears. Barwig’s wife, Liz,
runs the on-line aspect of the business.
Barwig was in law enforcement for many
years, but when he realized how fast his
pawn business was growing, he soon put in
for retirement. He said, “Looking into the
future when I reached the age of 60, I
knew I definitely didn’t want to still be
working for someone else. Now I’m my own
boss and enjoying every minute of every
day I’m in the shop!”
Dayton Valley Pawn gives back to the
community by helping many of the area’s
schools with fund-raisers as well as
purchasing ads in Silver Springs and Dayton
school yearbooks. They also offer
sponsorships to Little League teams.
“I like dealing with people on an every day
basis. There is always someone who needs
money and needs to sell, and someone
who has money and wants to buy,” Barwig
said.
Bonnie Matton covers businesses in west-
central Lyon County that cater to locals and
those who pass through our rural
communities. Questions or ideas? e-mail
editor@daytoncourier.com.
Tags: consumer credit, Dayton Nevada, Pawn Loans, pawnbroker, pawnshop
Posted in Pawn Shop Stories | No Comments »
Friday, September 2nd, 2011
From Finance Dot Yahoo Dot Com
Secrets From a Pawn Star
By Jeff Macke | Breakout
The business model of the pawn shop dates back over 3,000 years and remains largely unchanged: A customer in need of some cash gets a loan from a merchant, using a personal possession as collateral. The pawn shop holds the property for a predetermined amount of time, charging interest on the loan. If the customer can pay his debt before the deadline, he gets his property back. If not, it’s the pawn shop’s to resell.
While the basic transaction is much the same as it was in ancient China, the reputation of the pawn shop industry has fluctuated wildly. Pawn shops have often been portrayed and viewed as vaguely threatening stores located in seedy parts of town, where only desperate customers would dare venture to.
Today, the modern pawn industry has become something else entirely. Many of these shops, which also operate like small banks, are publicly traded companies and are becoming cultural phenomena. The embodiment of the new era of the pawn shop is Rick Harrison, star of History channel’s monster hit Pawn Stars and author of the book “License to Pawn”. Harrison, who runs the Gold & Silver Pawn Shop in Las Vegas, Nevada recently sat down with Breakout to discuss the economy, misconceptions about his business, and the endless number of curios he comes across when dealing with the 3,000 to 4,000 customers coming through his shop every single day.
Harrison immediately addressed the lingering perception of pawn shops preying on the down-and-out, or especially in Las Vegas, desperate gamblers down to their last chips. Despite the tough times, nearly 80% customers reclaim their goods; meaning a pawn shop transaction is more like a bridge loan for the roughly 25 million Americans without a traditional bank account, rather than a legitimized loan sharking operation.
Which isn’t to say the pawn shop business is impervious to the economy. Most assume the stores do better in a weak economy; but they don’t. Harrison explains that it’s the nature of buying and selling that changes based on economic conditions.
“When times are good, I’m buying less stuff and I’m selling more stuff. When times are bad, I’m buying at lot of stuff but it isn’t moving like it used to,” says Harrison. Reflecting the building slump in Vegas, there’s a glut of construction-related goods coming into his shop, but very little demand from buyers. As any student of economics will tell you, too much supply and little demand means lower prices. “At this point, we have just stopped taking construction tools altogether. That’s how bad construction is in Las Vegas,” says Harrison.
While Harrison’s front line view of his local economy is troubling, the beauty of the pawn shop business is that it can capitalize on whatever trend is hot at the moment. A car dealer is stuck selling cars regardless of vehicle demand. In contrast, the players in the pawn industry specialize in trends. Of course that brings us to the trading craze of 2011: Buying and selling gold and silver.
“I cannot keep gold and silver bullion in my stores at all,” the retail rockstar said. “We buy it every day. Every morning I put it in my showcase and it’s gone by noon.”
But if you’re ready to run to your local pawn shop to sell your jewelry, think again. Nobody in retail ever made money overpaying for goods then selling them at a discount. Harrison, like any successful pawn business, will offer a discount to the price you see quoted in financial news, and then sell your stuff at a premium if you don’t pick it up before the end of his 120-day holding period. It’s not personal, it’s just business.
Pawn shops are also the last place to go if you’re looking for a sucker to overpay for your junk. Harrison’s store carries as many as 22,000 different items at any given time, or as he puts it, the shop has “one of everything.” After 30 years in the business, he says it’s “pretty simple” to spot counterfeits. And if an item is questionable, he calls in an expert to vet the goods. It’s a good thing because there are plenty of hard-to-value oddities at any pawn shop, particularly one based in Las Vegas.
Harrison’s store alone has a fist full of Super Bowl rings, four Olympic gold medals, the boots that jockey Hall of Famer Willie Shoemaker wore in his 8,000 race, and a Pee-Wee Herman doll sealed in its original packaging. But those aren’t anywhere near the strangest thing on his shelves. At the moment Harrison is in possession of a 200-year old Japanese “pillow book” of the type he says were once given to Japanese brides on their wedding nights.
Ok then. Harrison says many of these rarities are more valuable to him as museum-type pieces than retail items. Museums may be the last thing you think of when considering pawn shops, but it’s a new day for an old industry. Whether to hock an heirloom or simply check out the modern version of Ripley’s Believe it Or Not stores, it’s time to change the way you think of the pawn shop business.
Tags: consumer credit, Las Vegas, License to Pawn, Pawn Loans, Pawn Stars, pawnbroker, pawnshop, Rick Harrison
Posted in Pawn Shop Stories | No Comments »
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 »
Saturday, August 20th, 2011
From TBO Dot Com
By KEITH MORELLI | The Tampa Tribune
Published: August 20, 2011
A Land ‘O Lakes man was arrested this week, accused of selling a baseball autographed by Babe Ruth to a Largo pawn shop in November. Problem was the signature — and an accompanying certificate of authenticity — was bogus, authorities say.
The arrest is part of a larger investigation that spans the state, as investigators say Marc A. Szakaly, 40, may have sold dozens of phony autographed balls from here to Orlando and Daytona Beach, and beyond.
Largo police detectives arrested him at his home in Pasco County on Wednesday night, charging him with a single count of organized fraud. He was released Thursday after posting $50,000 bail, jail records show.
The probe began March 18, when Largo police went to the Pawn Mart on Seminole Boulevard after the shop found that the Bambino-autographed baseball they had purchased from Szakaly in November was counterfeit. The ball came with a forged letter of authenticity, police said.
The pawn shop had cut a check to Szakaly for $1,500 and had put the ball on display, employee Lisa Matassa said. The ball was offered for sale for $4,000.
A month later a customer came in and put down a deposit on the ball, and that’s when it was sent to an authenticator in California who declared the ball and certificate to be fakes, Matassa said.
Largo police Lt. Mike Loux said the Pawn Mart was hooked by Szakaly’s story of woe. “He kind of gave them a sob story, that he had two kids and he was trying to make ends meet,” Loux said.
Szakaly offered to sell the ball for far less than market value and the pawn shop jumped on it, the lieutenant said. “They were thinking they were getting a good deal.”
After the Pawn Mart complaint had been made, investigators checked pawn shop databases across the state and found that Szakaly had sold Babe Ruth baseballs all over the place, Loux said.
“They all were pawned by the same person,” he said. Szakaly gave his real name each time. “It was odd that he used his true identity,” given the quality of the forgeries of the signatures and certificates, Loux said.
The incident sparked a larger inquiry with 19 Florida law enforcement agencies in 15 counties and the Office of Statewide Prosecution.
Statewide Prosecutor Nick Cox said Friday that more charges are likely.
Baseballs with authentic signatures of the New York Yankee Hall of Famer typically can fetch as much as $10,000, according to some online pricing guides. In 2005, a mint-condition ball signed by Ruth was sold for $150,000.
kmorelli@tampatrib.com (813) 259-7760
Tags: Babe Ruth Baseball, Pawn Mart, pawnbroker, pawnshop
Posted in Pawn Shop Stories | 1 Comment »
Monday, August 8th, 2011
From News Times Dot Com
John Pirro, Staff Writer
DANBURY– During his 10 years as a Waterbury police officer, Doug Mineo spent a fair amount of time in pawn shops and realized that business “fills a niche in society,” providing small, short-term loans that help people through tough times.
So when a bum knee forced the 50-year-old Plymouth resident into retirement a few years ago, opening a pawn shop seemed like a good idea.
“When somebody needs $50 to get them through the week, they can’t go to the bank for a loan,” said Mineo, who owns Hat City Pawn on Federal Road.
But they may have something of value — a laptop, tools, a camera or video games — that can serve as collateral so they can borrow a few bucks until their situation improves, he said.
“I had a vision of a shop based on honesty and integrity. If you’re going to do business in a community, you build it by doing the right thing,” Mineo said.
Pawn shops may be considered seedy and disreputable by some, he said, but in the year he has been in business he has collected a stack of letters from customers praising him for living up to his values.
One satisfied customer is Lenny Engelman, of Danbury, who a few months ago walked into Hat City Pawn with some of his wife’s old gold jewelry and a two large, silver-colored coins inherited from his father-in-law.
Mineo said he was concentrating mainly on the gold and only gave the coins a quick glance.
“I thought they were Eagles,” he said, referring to the one-ounce, silver bullion coins issued by the U.S. government. He paid Engelman $20 apiece for them.
“He called me back the next day,” Engelman said, “and he told me it was worth a couple of bucks more, so he asked me to come by the shop the next day so he could settle up.”
Assuming that the difference was only a few dollars, Engelman didn’t return immediately, so Mineo called him again the following day.
This time when Engelman went to the shop, he was surprised that Mineo counted out 10 $100 bills and placed them in his hand.
“He said, `I didn’t realize the coin was platinum,’” Engelman said. “He could have sold it for $1,200, and I would be none the wiser. But in this day and age, it was nice to meet someone who did the right thing.”
Other letters — with copies sent to the Police Department, which monitors the operations of all the pawn shops in the city — describe how Mineo helped the writers recover items that had gone missing from their homes.
In one, a Brookfield man recounts how Mineo returned two expensive guitars that had been taken in a burglary.
The man visited area pawn shops after discovering the theft and provided the staff with descriptions of a Les Paul guitar with a broken toggle switch and a brand-new red Fender bass.
So Mineo was prepared when two teenagers walked into his shop and tried to sell the instruments.
After opening the first case and finding the Les Paul, Mineo placed it behind the counter and waited as one of the teens placed the second case in front of him, unopened.
“I said, `This must be the red Fender bass.’ You should have seen their faces,” he laughed.
Mineo kicked them out of the store with a stern lecture, and they were later arrested by police. But the bottom line, he said, was the guitars ended up with their rightful owner.
Contact John Pirro
at jpirro@newstimes.com or 203-731-3342.
Tags: consumer credit, Pawn Loans, pawnbroker, pawnshop
Posted in Pawn Shop Stories | No Comments »
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
Posted in Pawn Ecomomics | No Comments »
Thursday, July 14th, 2011
From TBN Weekly Dot Com
Article published on Wednesday, July 13, 2011
CLEARWATER – Big Tim’s Pawn recently opened its second retail store, located at 1690 Clearwater Largo Road.
Big Tim’s Pawn Clearwater is a 5,000-square-foot store serving residents of Clearwater, Largo and Belleair and adjacent communities six days a week, providing cash loans and retail deals with superior service.
“Opening a Clearwater store is a huge goal for me being a local guy,” said Tim Russell, president and CEO of Big Tim’s Pawn, in a press release. “I graduated from Largo High in ’85 and never could get away from the area I loved.”
According to Russell, his first store opened in 2009 in Pinellas Park. His customers were looking for a more northern county location.
The staff at Big Tim’s Pawn Clearwater has more than 20 years of pawnshop experience.
Big Tim’s Pawn is committed to improving the Pinellas County community by sponsoring local police and high school events like the Pinellas County Sheriff’s Athletic Program and the Northeast High Cross Country program.
Copyright © Tampa Bay Newspapers: All rights reserved.
Tags: Big Tim's Pawn, Clearwater FL, consumer credit, Pawn Loans, pawnbroker, pawnshop
Posted in Pawn Shop Stories | No Comments »
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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