1. How does a pawnshop work?
Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to musical instruments, televisions, tools, household items, etc.. These items maintain their value over a reasonable period of time and are easy to store, especially jewelry. all customers provide collateral, eliminating the need to distinguish high risk from low risk borrowers. Typically, loans are small averaging between $70 and $100, although they can be as small as $20 or as high as several thousand dollars depending on the value of the collateral. The process is much the same as any other lending institution, with the primary difference being the size of the loan, the collateral and the holding of the merchandise until the interest or the loan has been repaid.
2. Why would someone go to a pawnshop to get a loan?
Pawnshops offer the consumer a quick, convenient and confidential way to borrow money. A short term cash need can be met with no credit check or legal consequences if the loan is not repaid. A customer receives a percentage of the value the broker believes the collateral would bring in a sale. Although the loan to collateral ratio varies over time and across pawnshops, a loan of about 50 percent of the resale value of the collateral is typical. In other words, pawnbrokers feel their loan is "paid in full" at the time it is made. When a customer pawns an item, terms of the loan are printed on a pawn ticket that is given to the customer. The ticket states the customers name, address, type of identification provided to the pawnbroker, a description of the item, amount lent, maturity date.
3. What is the foreclosure procedure?
If a customer defaults, the collateral becomes the property of the pawnshop after the loan is overdue by a specific amount of time.
4. Do most pawning customers lose their merchandise?
On average, 85 to 90 percent of all loans are repaid. Repeat customers make up most of our business, similar to any other lending or retail establishment. Pawnbrokers know the vast majority of their customers because they often borrow against the same items over and over again. Pawnbrokers offer non recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. It is solely the choice of the customer whether he/she elects to repay the loan.
5. How can I be sure the merchandise I purchase at a pawnshop isn't stolen?
Less than one fifth of one percent of all collateral is even suspect as having been misappropriated in any manner. Thieves and robbers are a pawnbrokers worst enemy. Pawnbrokers work closely with local law enforcement to catch and prosecute these perpetrators. A customer must provide positive picture identification to show evidence of the transaction. This information is then presented to the police department, therefore decreasing the likelihood that a thief would bring stolen merchandise to a pawnshop. Pawnbrokers are trained to look for signs of stolen property to avoid these costly mistakes. It is not in the interest of the pawnbroker to accept potentially stolen merchandise because the police can seize the merchandise and the pawnshop owner loses the collateral and the loaned money.
6. What is the difference between buying at a pawnshop and buying at a retail store?
Mainly price! Pawnshops can offer you quality merchandise ranging from 1/3 to 1/2 off retail prices. Pawn shops are an excellent place to find great deals on Gold, Diamond & Gemstone Jewelry!
7. Why is the image of pawnbroking changing since the 1930s?
Today's pawnbroker is upgrading everything from the interior and exterior of his or her shop location, employee presentation, customer service, signage, marketing and the merchandising approach. Pawnbrokers focus on providing exceptional customer service and are very active in the community, both politically, and in local charities. Pawnshops today range from a single or multi-store operation to publicly held company chains. The atmosphere at a pawnshop is nothing like what you saw in Rod Steiger's depiction in The Pawnbroker — just visit one to see for yourself. But you must also realize that there will always be the bad apples in the barrel, just like in any other industry.