Let's Talk Pawn!
This History channel reality show follows the exploits at the World Famous Gold & Silver Pawn Shop in Las Vegas, and is actually very entertaining and even educational, at times. Customers bring in their prized possessions to sell or pawn, items are appraised by either the shop’s employees or a professional appraiser, and then the usual haggling over the value and price begins.
You may or may not know that Pawn Stars became History’s highest-rated series and the second highest-rated reality show on TV last year. Just goes to show how popular the pawn business is in America.
But before you go packing up those boxes of “miscellaneous” knickknacks and taking them over to your local pawn shop, let’s brush up your pawn store knowledge!
Pawn shops are actually in two main businesses:
- The loan business.
Pawn shops provide loans that are secured by the item that is pawned. Some have even been known to offer car title pawn loans. Although, with a car title pawn loan, the pawn shop will take possession of the car and retain it for the duration of the loan. This is much unlike a traditional car title loan in which the borrower gets to keep and drive the collateralized car. Therefore, in these cases, a majority of people opt for a car title loan rather than a car title pawn loan, since they need their cars for daily use.
With pawn loans, the store usually keeps the item until the loan is repaid with interest; then, the customer gets their item back. In very rare cases, some pawn shops may prefer not to take possession of the pawned item; in this case, the loan amount offered might be lower since the store is not retaining the collateral.
- The second hand retail business.
Pawn shops can also buy items outright from customers and resell them in the store or online. Additionally, if a customer does not repay a pawned item loan, the shop keeps the item and can resell it at their discretion. Statistics vary widely on repayment rates, but the Gold & Silver Pawn Shop, featured in Pawn Stars, claims that the rate dropped from 90% to 70% during the recession, and is now hovering around 80%. Statistics for other shops seem to be a little lower.
Despite how fashionable the Pawn Shop business has become, the pawn industry hasn’t always been received well. Pawn shops have historically taken flack for several reasons:
- Some customers use the money for questionable purposes (gambling, bail, etc.).
- Pawn stores are a frequent target of robberies and heists.
- Although their loans are collateralized, pawn shops may still charge high interest rates and fees. But, remember, they are assuming a high level of risk on many levels.
Nevertheless, be smart and borrower responsibly; spend some time researching a few different options, including other types of loans or lines of credit. You may find that you would be better served by an unsecured personal loan, for instance.
Or as mentioned above, a car title loan may be an option, if you need immediate cash. There are lenders who have very few guidelines and do not require a credit check or any other verifications.
If you are interested in learning more about how you can get cash fast, with only your driver’s license and the title to your car, please call Coastal Title Loans & Finance, LLC at 714-701-8555, and one of our experienced and friendly loan consultants will be happy to help.