Frequently
Asked Questions
- How
does a pawnshop work?
- Why
would someone go to a pawn shop to get a loan?
- What
is the foreclosure procedure?
- Do
most pawning customers lose their merchandise?
- How
can I be sure the merchandise I purchase at a pawnshop isn't stolen?
- What
is the difference between buying at a pawnshop and buying at a
retail store?
- Why
is the image of pawnbroking changing since the 1930s?
- Are
pawnshops a "bad times industry?
- Do
pawnshops attract indigents and derelicts?
- Do
pawnshops down-grade the neighborhood and hurt property value?.
- Are
there firearms in pawnshops?
- Are
pawnshop rates excessive?
- Should
photographing or fingerprinting pawnshop customers be required?
- Should
there be zoning restrictions other than general retail?
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 $10 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.
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. 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
customer's
name, address, type of identification provided to the pawnbroker, a
description of the item, amount of loan, maturity date, interest rate and
amount that must be paid to redeem the item. Most states regulate
pawnshop interest rates and other charges, such as storage or insurance
fees.
If a customer
defaults, the collateral becomes the property of the pawnshop after the
loan is overdue by a specific amount of time. In the state of
Georgia, that time would be one month. Acme Pawn Shops are very
willing to work with clients and hold merchandise for a short period of
time after the due date if the customer gets in touch with us.
On average, 70 to
80 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.
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. Pawn tickets are
electronically sent or mailed to the local Police Department on a daily
basis. A customer must provide positive
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 interests 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.
Mainly price.
Pawnshops can offer you merchandise ranging from 1/3 to 1/2 off retail
prices.
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.
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Pawnshops survive
bad times if they make adjustments both at the retail and loan counters,
but they do far better in good times. In hard times, customers move away
to find employment, have less ability to repay their loans and the
value of all merchandise goes down. Merchandise values go down because
the major retail discounters sell for less to maintain or broaden market
share. If they sell for less, pawnbrokers must loan less thus earning a
smaller return. Regardless of income level, most people periodically
borrow money. In good times, customers are more able to repay their
loans and unredeemed merchandise sells faster because customers have
more discretionary income.
On average, 70 to
80 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.
Neighborhood
property values are impacted by the appearance and care given to the
properties. There is no factual basis to support a claim that an
eye-pleasing pawnshop negatively impacts values. On the contrary, if
they attract customers, they enhance the opportunities for other
merchants and the community.
Pawnshops are
registered firearms dealers with permanent places of business. Pawnshops
comply with all Federal (ATF) regulations as well as furnishing local
law enforcement with information regarding every transaction. No other
dealer does this. As registered licensed dealers, pawnshops comply with
the 5 day waiting period and back ground checks required by the Brady
Bill. Federal firearms regulations require an individual to be 21 years
of age to purchase a handgun and 18 years of age to purchase a long gun.
Pawnshops provide a unique public service by taking guns as collateral
for pawn loans. They are the only business that actually takes guns out
of circulation and keeps them locked up in secured vaults. There are an
estimated 1.5 million secured firearms in pawn shop vaults across
America.
To provide the
service, all lenders must charge rates commensurate with risk, size and
duration of the loan, collateral offered, and recourse. Pawnshop loans
are small dollar, high risk, short duration loans. The item stands as
the sole collateral offering no other recourse. And pawnbrokers are
liable for replacement value if something happens to the item in their
care. There are no hidden charges as with other lending institutions.
On
the other hand, pawnbrokers cost basis is far greater. They incur cost
for security, handling, storage, and regulation not incurred by others.
Due to the 15-20% of pawn shop customers that elect not to repay their
loans, pawnbrokers are forced to turn their "bad debt" into a
retail center to recover their cost. Other lending institutions do not
incur retail cost including additional floor space, gondolas, counters,
personnel, advertising, shop lifters, retail competitive cost, and new
merchandise cost to supplement the unredeemed goods.
Pawnshop
customers already provide full identification with each transaction, a
copy of which goes to local law enforcement. Additionally, most
pawnshops maintain surveillance cameras in their stores, the same system
used by banks. To require anything more than required by banks implies
there is a relationship between how much money one has and their
integrity. You have questioned the quality of their character based on
financial status - a form of discrimination.
Pawnshops are
neighborhood businesses providing vital services to the community. To
restrict zoning to other than general retail should require a very
compelling reason. The compelling reason should not be historical
perception. To restrict zoning there should be something wrong with the
service provided, the business itself, or the customer served.
The services provided by pawnshops include:
1. Discount Retail (new and pre-owned) is an opportunity for customer to
make their dollars go further - it helps other merchants and community
by giving them more discretionary funds.
2. Short-term credit enables the community to pay the bills of other
local merchants such as groceries, medical expenses, utilities, auto and
transportation to work. The pawn business is a neighborhood business
with the majority of customers residing within 1-2 miles. The same
people utilize a pawnshop that utilize McDonalds. If appearance or
wrongful activities are a problem, it has to do with that particular
business, regardless of the kind of business. The customer is the
surrounding neighborhood - if good, good - if bad, bad. Restrictive
zoning denies access to credit to low income consumers who cannot travel
or who are uncomfortable in restrictive areas. Restrictive zoning
implies the neighborhood is dishonest and questions the integrity of the
residents - and it says that how much money your have determines the
quality of your character.
