Saturday, July 11, 2015

Watching the tube

I am watching a TV show called 'Pawn Stars' and it is about a pawn shop.

Unfortunately the shop appears to buy most of their merchandise and reselling it instead of doing what pawn shops generally do which is make loans.

Pawn shops have a reputation of being places that prey on the hard up people of the world. In the movies, for example, you see a desperate woman pawning her wedding ring.

What people do not realize is that years ago pawn shops supplied the public with more short term loans than the banks did. They were a whole lot easier to deal with. 

One simply brought an item of value in and got a loan on it. The pawnbroker generally gave the person a loan based on about half of what he felt he could sell the item for if the creditor didn't redeem it within the  proscribed time, generally 90 days depending on local rules. 

For the creditor to redeem the pawned item he had to come up with the loan plus interest inside the proscribed time. Of course, the pawnbroker held the item as collateral. The time limit can usually be extended simply by paying the interest.

It's a fairly simple system and most pawnbrokers really do want the  creditor to redeem his item as it was a whole lot easier than having to resell the item. They'd rather have the loan redeemed and make the profit through interest and have a repeat customer.

Pawn shops have a reputation for being places to peddle stolen items but any honest pawnbroker knows he'd lose his license if he got caught dealing in stolen goods on top of the other criminal charges. A stolen item is a pawnbrokers nightmare because it is simply impounded by the police and he loses out.

Pawnbrokers also have to be pretty sharp to avoid losing money by buying counterfeit items. They have to be able to spot fakes. It requires a pretty broad knowledge of things. 

Occasionally a pawn shop may specialize in an item of family of items. I knew of one pawnbroker that dealt entirely in firearms. When I decided to hitch hike to Alaska that pawnbroker gave me a pretty good deal on a WW2 Mauser that I took with me. He even threw in a case. I think I paid $50 for it. It was a WW2 bring-back.

In the southwest part of the country silversmiths actually used to make large pieces of turquoise and silver jewelry that Indians bought simply for when they needed a loan in hard times.  It was portable wealth and could be used as collateral for a secured pawn loan and redeemed after the crops came in or the sheep were sold or shorn.

These days pawn shops generally do what they used to do and that's supply people with fast cash, either by buying an item or floating a loan against an item.

Some of them are often pretty good places to get deals on things that the borrower has defaulted on. Generally they are pretty flexible on prices and will take less than the price they have on the tag.

It's too bad that the Pawn Stars show doesn't show a little more about the operations that they perform instead of just focusing on buying stuff for resale. It strikes me that the rest of the operations they go through would be interesting to watch.

To find out why the blog is pink just cut and paste this: NO ANIMALS WERE HARMED IN THE WRITING OF TODAY'S ESSAY

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