Pawnbroking is one of the world’s oldest business models, dating back to ancient times. Television shows like the one based on our Detroit pawnshop, American Jewelry, and Loan, have helped to raise consumer awareness of the industry which makes us very proud. For all of the positive light, however, there still exists a lot of confusion about what a pawnshop truly does.
We work, therefore, to educate consumers about pawn loans. Pawn loans are non-recourse collateral loans. We recently partnered with three nationwide nonprofit organizations who help many of the unbanked or underbanked customers that pawnshops often serve: Operation Hope, Greenpath Financial Wellness, and Junior Achievement. We hosted a workshop that was designed to inform our customers about their lending options and connect them with resources that could make a positive difference in their lives. We believe that everyone has the right to make informed choices when they need quick access to cash.
We are often asked about how pawnshops determine the value of merchandise that’s brought in. Recently, we’ve seen some very misleading information in the press that talks about the disparity of values from one pawnshop to the next. It’s time to set the record straight, so we’ve consulted with some of our pawnbroking peers from all over the country and asked them to weigh in on just how the value of an item that a customer brings to a pawnshop is determined.
For consumers who are curious about online bidding sites, Brad Blalock from Marble Falls, Texas notes “It is imperative that we see the item in person to ensure condition and proper valuations for both parties involved.” At his store, Best Little Pawn Shop, he notes that they never suggest shopping valuations from store to store by electronic means or without taking the item with you as that will frequently end in disappointment when the pawn shop finally does see it in person. “Another reason for valuation differences may be simply demographics. We may be able to value a farm implement significantly higher than a competitor 20 miles away in a larger city. Valuations can vary drastically within our state of Texas, many times just from one town to the other.”
Third generation pawnbroker Taylor Packwood adds “It is very apparent that many of our customers are in stressful situations, and for many of them, we are their first stop for help. We follow the Golden Rule with every customer” noting that while customers want the highest value for their item, his staff is careful not to over-loan which can lead to higher default rates. Nationally, the average redemption rate is 80% or higher. Pawn customers need to understand the terms of the transaction so that they can get the cash they need without over-extending themselves.
At Iowa’s Allied Pawn, Jamie Smith notes that his team “Always qualifies the customer first” before looking into market value. “We always look for creative solutions we try to avoid saying ‘no.'” Kim Foster, whose family operates six locations of Uncle Dan’s Pawnshop in the Dallas area, concurs noting that they always cite numerous sources when arriving at a value for an item.
Cliff Zlotnik captures the personal nature of the business “When we believe the customer is strongly attached to an item and wishes to try and redeem it, we offer to either loan or buy the item at the same price.” At Sparklez Jewelry and Loan, he says, “We don’t want them to have to sell an item and endure undue stress just to get a little more money.”
Pawnbroking is a complex collateral lending model with a history as long as civilization itself, and a promising future. Like most pawnbrokers, we always welcome the opportunity to help curious customers learn more about the work that we love. Learn more at our website or drop by your local pawnshop today!