If someone would have told me ten years ago that pawn shops would become a big business, I would have thought they were crazy. Looking at the status of these places now, maybe I’m the one who was crazy.
The rise in popularity of the pawn shop is basically a result of the bad economy. Anyone with bad credit can dismiss the idea of getting decent loans from banks, so many have turned to pawn shops to get some quick dough from borrowing against items like jewelry, musical instruments, and other valuables.
There are some who say this is something to be concerned about since loans from pawn shops can sometimes carry interest rates of 20% per month. That’s a chunk of interest to be sure but if someone is in need of quick money, there may not be a less expensive alternative. As one operator in Boston says, “It’s a short term loan designed to bail someone out and be done with it.”
Corey, Rick, and "the old man" of Pawn Stars
It’s a simple process: Credit checks do not exist and loans have no effect on credit scores. The shop owner simply looks over the item(s) brought in and offers a loan against it. If the loan is paid back within 30 days, the items can be reclaimed. Loans can also be extended but if payment is not made on time, the shop can put the collateral up for sale.
With banks tightening their requirements, a lot of them are requiring a credit score of at least 700 to qualify for loans. That leaves many in the cold with the local pawn shop being their only alternative.
Hey buddy. Can you spare a dime for my campaign?
Since the start of the economic downturn, typical pawn loans have doubled to about $150. Interest rates can vary and depend on the size of the loan. In the South loans are usually smaller and are made against items like power tools and lawn mowers. In that area interest rates can be as high as 20%, not a very good deal but if you are strapped for cash, what can you do?
I could almost swear that I saw Obama at a pawn shop in Scottsdale the other day trying to hock his undeserved Nobel Prize. Poor guy, he must be about out of money from his 160 fundraisers and cash from his Obama zombies in Hollywood. Plus, Michelle is packing for her trip to the London Olympics but taxpayers will be paying for most of that I’m sure.
However, there is the little matter of the town of Durham, New Hampshire who wants $30,000 from Obama to cover the expenses the town incurs from his campaign visit. That may explain why he is asking people to defer on buying wedding gifts for friends and giving him the money for his campaign instead. Now, that is one classy guy!
I’m sure your friends getting married will be thrilled to hear you gave the cost of what would have been their wedding present to Obama.