Do you go to pawn shops?

By Stew

A year and a half ago, someone gave me a 50cc scooter. It was of uncertain foreign brand and I could not figure out how to even change the oil. None of the shops in my area would even work on it because they did not know where to get parts for it. People mocked me for driving that scooter, but it sure was convenient since we only have one family vehicle and in our state, scooters under 51cc do not have to be licensed, registered or insured. Between adding a little oil now and then and buying gas, I drove it for about $3 a week. Anyway, I drove it to work most days of the week all until it was stolen about six months ago. I think someone just picked it up and threw it in the back of a pickup truck and that was the end of it.

Anyway, I have started to look for a replacement scooter on Craigslist, Ebay, used motorcycle shops and pawn shops. We have a surprisingly large number of the latter in our area. I have always been fascinated by pawn shops, but I think I had only entered one once before the past couple of weeks. I did not even understand what it meant to pawn something until recently.

I think I have discovered a new hobby.

Our family frequents second hand stores and rummage sales on a regular basis, but I have found pawn shops to be much more exciting. Second hand stores seem to have nothing other than clothing and broken furniture. Pawn shops have tools, electronics, jewelry, bicycles, musical instruments, televisions, guns – all kinds of cool stuff. My wife pretty much assumes that everything in there is “hot”. I think that might be an exaggeration, but it certainly adds to the excitement factor.

If you were like me and did not know much about pawn shops, here are a few pointers that I have picked up:

  • To pawn an item means that you bring something of value into the store and the owner will lend you a sum of money and keep your item as collateral. You can have your item back if you pay back the loan principle and interest by the agreed upon deadline, usually six months to a year.
  • An item in possession of the pawn shop that has not been redeemed is said to be off pawn and the store is free to list the item for sale.
  • The amount of the pawn loan is usually a relatively small percentage of the value of the item, ten to fifteen percent is all.
  • Pawning an item is often the last resort for many people. If you are pinched for cash, using a pawn shop might seem a little desperate, but it is an infinitely better option than taking a cash advance from a credit card or applying for a payday loan.
  • If you are shopping in a pawn shop, you need to have a good grasp of the values of certain brands. For instance, today I saw two bicycles for sale right next to each other. To me, they pretty much looked the same, yet one had a price tag of $50 and the other had a price tag of $999. I had no idea which one was a good deal or a rip off.
  • If you buy an item in a pawn shop, be sure to check it out thoroughly. All merchandise is sold “as is”, some stores clean things up a little, some do not. It is up to you to determine if the item is in good working order.

After spending some time in the pawn shops lately, I did not find a scooter, but I have my eye on a bicycle and possibly a microwave. We have had the same one in our kitchen since we were married and it is close to the end of the line I fear. I was also looking around my house today for something to sell or pawn. The problem is that just about everything we own was second-hand when we purchased it. Although we do have a glass china hutch from my great grandmother . . . hmmm . . . Do you think Mrs. Stew would miss it?

Article by Stew

Photo by hsjfender

14 Responses (including trackbacks) to “Do you go to pawn shops?”

  1. Courtney Says:

    I’ve never been to a pawn shop, but I’m curious – if it turns out the item you’ve purchased was ‘hot’ do you have any recourse? Does the original owner? Absent an arrest of the thief, someone is left holding the bag. Is that the risk the shop owner takes?

  2. Stew Says:

    I am not speaking from knowledge here, but I think that really valuable items, most shops investigate a little. I don’t believe that most of them would knowingly pass along stolen merchandise. Frankly, we probably run the same risk at rummages and second-hand stores, although the items are not as expensive in those venues.

  3. dramon Says:

    Thanks for the article, I have often wondered about pawn shops as well. I frequent most types of second hand stores except for these. I might have to give them a try.

    In our area, I have actually found that most second hand stores seem to have less merchandise, I am not sure if because more are shopping there or more people are selling their own stuff via Craigslist, ebay or both.

  4. Stew Says:

    dramon, I have noticed that as well. I think there are two possible reasons – 1) pawn shops, craigslist, etc. give you money for your item, whereas 2nd hand stores usually request donations. If your item is worth money, most people do not want to donate and 2) I think the affluence of our society has made people too lazy to take stuff in – they just throw it away.

  5. Wayward Says:

    I have a couple friends whose husbands have purchased some really nice and unique jewelry items for them at pawn shops. I’m absolutely in love with the turquoise earrings one friend found. I’ve never been in one, but I keep meaning to check it out.

  6. Alice Vaughan Says:

    Concerning the microwave….just a thought…

    Am not sure what kind of microwave you have but when my husband I first married, we bought a larger Litton microwave which had a shelf inside, a temperature probe, browning capabilities, etc, etc, etc…a stove I loved and used for well over 20 yesrs.(Five kids, needed a good sized one) At about 15 years, it quit. Being frugal as I am and thinking perhaps it could be repaired (paid $$$$ when they first came out!!)I enlisted the aid of a local small appliance repairman. Lo and behold, with a small and relatively inexpensive part replaced we may have been set back about 50 bucks…and it goes on strong! The new ones of today, they are disposable.

    Love your blog…keep up the cause.

  7. Aystub Says:

    I LOVE pawn shops.

    My best deal ever was a $100 guitar that is sitting next to me today – 6 years later.

    They’re gems, but they just don’t get enough credit in my mind.

    Austin @ Foreigner’s Finances

  8. Michelle Says:

    On the one hand, pawn shops are a little like payday loans – in that the amount of interest you pay to have a short term loan based on the value of your item is REally, Really high…and that bothers me – that poor people, the least financially savvy people (usually), view pawning items as a valid means of making it in a tough month. on the other hand, people get the opportunity to cut their losses and not reclaim their items if they want – so they are masters of their own destiny – as opposed to many of the paycheck lender models that trap people in a vicious cycle.

    And there are some great bargains to be found at pawn shops – jewelry, guns, tools…if you know what you’re looking for and can evaluate the true value of the item you’re purchasing.

  9. jess Says:

    Pawnshops are all different. Just like restaurants, teachers or doctors there could be some bad ones and good ones. The best ones to go into are the ones that are small businesses and not corporate chains. Many Pawnshops have been around for more than 50 years and it is truly a family business.
    A Pawnshop is a highly regulated business unlike many secondhand or antique shops. It is regulated on the Federal level as well as the State. The merchandise that is for sale has already been submitted and matched with stolen reports by the police department. Good ID is required and it really deters thieves.
    There are many unbanked people in america. Due to bad credit or banks strict penalties for defaulting and fees. Pawnshops average loan is about $80 and more than 80% of customers redeem their merchandise. There is an astonishing amount of people that truly just need a few bucks to get them through the week or fill up that tank of gas before payday rolls around. There are millions of reasons why people need a quick buck and since you spent money to purchase things you would hope thy have some loan value in a pinch. It isn’t just poor people, there are white collar workers that need money too. Always remember to check for the interest amount upfront and the duration of the loan. Unlike payday loans and check cashing the loan is non-recorse (will not affect credit) and the loan is well explained and upfront.
    As for shopping there are all kinds of great things to buy from jewelry and watches to musical instruments, tools and antiques. So many people sell their old when they upgrade and are smart enough to get some cash for it instead of sticking it in a storage unit and paying for years. It gives people an opportunity to buy at a great price. It is also a great way to recycle. Most pawnshops do a bit of refurbishing and cleaning to sell it in tip top shape. It beats retail markups and it reduces your carbon footprint.
    Pawnshops get a bad wrap due to “movies” and some seedy shops. Thanks for being opened minded.

  10. Taylor Says:

    I buy my Craftsman tools at pawn shops. They seem to keep them in the back, and you have to ask for them to bring them out, but they have wrenches of all sizes, screwdrivers, sockets, etc. And Craftsman comes with a lifetime warranty, so you are getting quality.

    I discovered pawn shops when my tool box was stolen. I have joked that I may have simply repurchased my own tools.

  11. Stew Says:

    Ha, Ha! I was looking for my stolen scooter too. :)

    I knew a guy who would stop on the highway to pick up discarded Craftsman tools, then he would take them back to Sears and exchange them for brand new ones.

  12. Deena @ Craftsman Discount Says:

    Hi, just doing some research for my Craftsman website. Amazing the amount of information on the web. Looking for something else, but cool site. Have a great day.

  13. cheri Raye Says:

    Well, this isnt completely accurate, when you take an item to pawn, you will get up to 3 months to pay it back, I dont know of any pawn establishments that give you 6 months to a year. You may drag it out that long by rebuying the interest on the item. Be very sure about an item you intend to pawn as far as whether you want it back or not, if you do make sure you buy back before the 90th day or you will get nailed a very hefty interest rate.

  14. Shawnee Pawn Says:

    As a pawn shop owner, I really liked this blog — especially the discussion comments. To follow along with what cheri said above, it really depends. I know at our pawn shop, the terms of payback vary largely from item to item, as well as how much was borrowed on the item. Much like a bank that lends money, say for a car loan, they assess everything on the calculated amount of risk. The risk goes off of amount borrowed, quality of the collateral, and more. That said, it isn’t uncommon to give people 3-6 months… but that may just be our way. Thanks again for the great blog!