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. Usually, loans are small averaging between $75 and $150, although these can be as small as $10 or as high as several thousand dollars depending on the value of the collateral item, and the need of the customer.
How do you determine the value of items?
1. We lend based upon the current resale value of an item. This value takes into account a variety of factors including the age of the item. Is it still desirable or has a new product made it obsolete or decreased its value.
For example: video game systems outdate very quickly, a product that was worth $400 3 years ago may be practically worthless because no one will purchase an outdated platform. Another example would be the nearly 50% depreciation in the value of new VCR's as DVD becomes more mainstream.
2. Is the item complete? Item's are often purchased with accessories such as remote controls, AV cables, battery packs etc. If these items are missing it may radically effect the pricing of a possible loan – especially if the missing accessory contains controls or other things that are essential to the operation of the item.
3. Are there factors effecting the 'end cost' of the item?
4. Supply and demand plays a part in value evaluation. What is the current demand for the item - high or low? Do we have an overabundance of a particular item in stock?
5. Are there outside issues effecting the market value of the item? This may include any possible repair or appraisal costs. These issues may reduce the possible resale value or increase the overall cost of an item and as such lower the possible loan amount.We attempt to loan the highest amounts that are feasible for our customers, within the current marketplace.
Do most pawn customers lose their merchandise?
On average, 70 percent of all loans are repaid. Repeat customers make up most of our business, similar to any other lending or retail establishment. We know the majority of our customers because they often borrow against the same items over and over again. It is the choice of the customers whether he/she elects to repay the loan.
What is the difference between buying at a pawnshop and buying at a retail store?
Price. Price. Price.
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 pawnbroker's worst enemy. Pawnbrokers work closely with local law enforcement to catch and prosecute these perpetrators. Pawn tickets are electronically sent to Leads On-Line. Leads On-Line is available nationwide to any local Police Department on a daily basis. A customer must provide identification when obtaining a loan. These precautions decrease the likelihood that a thief would bring stolen merchandise to a pawnshop. Loan officers are trained to look for signs of stolen property. It is not the intent or desire of the pawnbroker to accept potentially stolen merchandise under any circumstances.
Are pawnshop rates excessive?
Interest rates are state regulated. Maine offers one of the nation's lowest interest rates. Please note, that 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, and short duration loans. 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 30% of pawnshop 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, shoplifters, retail competitive cost, and new merchandise cost to supplement the unredeemed goods.
Is all your jewelry from forfeited pawns?
No. We do buy a great deal of jewelry from estates, and from folks who simply want to trade in or "up" for something we're offering for sale. We also offer a selection of new items that we frequently sell. For example, chains for pendants (snake, box, wheat, etc.) and diamond stud earrings are hand selected and paired together.