Hock Heaven: Pawn Shops Offer Quick Solutions in Tight Times
February 2, 2012A Pawn Shop misconception is that Pawn Shops are willing to buy anything and everything that a customer brings in… from kitchen nicknacks to old baseball cards. The truth is just because a customer brings in something to the Pawn Shop does not mean that they are going to walk out of the Pawn Shop with a $1k cash. Today''s featured article unearths some of the Pawn Shop myths and highlights the skyrocketing Pawn Industry. The article comes from Lansing State Journal. Read more below:
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 borrowers are pawning their jewelry, electronics and other valuables to make ends meet.
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.
"There have been some outside influences that have generated a lot more traffic flow," said Tyler Selph, owner of Cash 4 Anything Pawn in Williamston.
Shows such as "Hardcore Pawn" on truTV and "Pawn Stars" on the History Channel have made an impact, he said.
"That helps to break down some barriers that people might have some preconceived notions about pawn shops," he said.
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 on to what might be their only tickets to cash in the future.
What''s key about loans from pawn shops is the process: A credit check isn''t required and transactions 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 a certain period of time, often 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.
January is a busy month for loans at Selph''s Williamston shop.
"People are overspending at Christmas time," he said. "You can''t go to the bank and get a $200 loan to pay your electric bill."
Secondhand stores
Most of the so-called "pawn shops" in the Lansing area are technically secondhand stores, said Gary Potter, owner of Lansing-based Dicker and Deal Inc.