5Ws+1H: How It’s Made: Pawn Shops Still Offer Quick and Easy – Though Sometimes Expensive – Access to Cash | News
With the exception of those who watch reality TV, few people know about the pawnshop industry and how it works.
People can sell their unwanted goods in pawnshops. However, those who need money quickly, but want to keep their item, can pawn it. This is a collateral loan, with the customer leaving an item and having a certain amount of time to repay the loan, with interest, to the pawnbroker.
Todd and Greg Boyle of BS&G Pawn Shop said the item someone brings must have some sort of value and must be able to be resold. However, they try to accommodate all commodity values.
“We pawned everything from the mundane, like weedy rodents, to the bizarrely exotic, like the 26-foot anaconda skin,” Todd said. “It’s up to us to take everything they bring to us, because our clients need funds. To do this, we need to make a profit on them in some form – either the interest they pay us, or by selling it if they don’t come back and get it.
A customer could pawn an item for $5 or $15,000. It comes in the form of jewelry, electronics, collectibles, tools, guns and more.
“One of the things about pawnshops is that we’re hands-on,” Greg said. “If you need $30, try going to the bank and borrowing $30. If you need $30, come here with something you don’t need that’s worth $50 or $60, and I’ll lend you $30 on it.
The Department of Consumer Credit regulates and licenses pawnshops, and the State of Oklahoma sets the interest rate table. According to the Oklahoma Pawn Shop Act, the interest rate on loans up to $150 is 20%. The rate is 15% for loans over $150 and under $250.
“Pawns last 60 days, and that’s two 30-day terms,” Greg said. “The first 30 days are fixed. So if you borrowed $100 today, from the minute you walk in the door until the 30th day, you owe me $120 to get your item back.
The second 30-day term is pro-rated, so the interest is split equally, day by day. At the end of the 60 days, the cost of a $100 loan would be $140 to get the item back. If the person does not return to repay the loan within that time, the pawnbroker can sell the item.
Pawnbrokers cannot offer loans for abstract forms, such as land titles. The pawnbroker must be ready to have the object in his possession.
“Like the vehicles that we pawn are parked in our impound lot,” Greg said. “They can’t get around with the car.”
A customer must have a valid ID to pawn an item. While pawnbrokers are required to make their records available to law enforcement, BS&G voluntarily reports all of its transactions through an online system to local authorities, which is also available nationwide. The sales receipt is uploaded online, which includes the customer’s signature declaring ownership of the item.
“It’s always fun to look around, because you never know what you’re going to find,” said Greg. “And we never know what’s going to come in the door.”