So you take a look at your electric bill and realize you don’t have the funds to cover it. Or maybe you’ve got the funds, but they’re set aside for groceries. The electric bill is due in two days. What do you do?
In tough economic times, more people are turning to pawn shops when they need quick cash; and pawn shops are, in turn, becoming more socially acceptable business operations. Traditionally located in poorer neighborhoods, pawn shops developed a reputation of being dark, dingy, and sometimes dangerous places where stolen goods were bought and sold. Times have definitely changed.
Pawn Shop Business Is A Sign Of The Times
The pawn shop industry of today reflects how our struggling economy affects the working class. For instance, some pawn shop owners report that more people are pawning power tools and construction supplies, suggesting jobs lost, projects put on hold, and people out of work. But pawn shops no longer cater strictly to working class customers. Plenty of pawn shops have opened in the suburbs, where the well-to-do drive up to the stores in late model cars to pawn surprisingly valuable items in exchange for quick cash.
In the past, pawn shops specialized in fairly small loans, usually between $75 and $100. But lately, the pawn shops are doing a lot more business; people are seeking larger loans and are pawning more substantial items. More people are living paycheck to paycheck, and extending their loans for an extra 30 to 45 days. More people are defaulting on their loans and the pawn shops are filling with merchandise. Right now, it’s a shopper’s market, and good deals are often found at pawn shops. But fewer people have the money to buy.
How It Works
A pawnbroker will usually accept anything he (or she) thinks can be turned around and sold for a profit. That’s the business of pawn shops. You bring in an item of value as collateral on your loan. The pawnbroker first decides if the store needs the item at all. For instance, wristwatches are usually in abundance and are hard to sell. On the other hand, unusual jewelry, flat screen TV sets, iPods, golf clubs, or laptop computers are likely possibilities.
The amount of cash you are offered will vary from pawn shop to pawn shop, but you can expect to be offered anywhere between 10% and 40% of the item’s “fair market value”—a fairly subjective judgment call. Items of higher value often merit a higher percentage. For instance, you may be offered 10% of the value for your wristwatch, whereas you may be offered 40% of the value for your motorcycle or power tools. It all depends on how easily the pawn shop will be able to sell the item, in case you default on your loan.