Pawn shops have become respectable. Not so long ago, they were considered a haven only for drug dealers, thieves, and the chronically poor. But in case you haven't noticed, the pawn industry has given itself a makeover.
Pawn shops are now the backdrop for reality television series like Pawn Stars on the History channel and truTV's Hardcore Pawn. Online, upscale pawn shops with names like Pawngo.com, UltraPawn.com, and iPawn.com are chasing affluent individuals and families that don't need money immediately but want a more sizable loan to help their cash flow; these Web-based businesses are also betting that some middle- and upper-class customers will find it more appealing to pawn items in the privacy of their own home instead of driving to a seedy neighborhood. And there's even a chain of pawn shops—Money Mizer Pawn & Jewelry, with seven locations throughout Georgia, Alabama, and Florida. By the end of 2014, the company expects to have 16 to 18 stores open and operating.
Still, no makeover can change the fact that pawn shops are still what they've always been: a pit stop on the road of despair and desperation. Nobody goes to a pawn shop after they win the lottery.
"It was rather demoralizing initially, but I got over it," says Cynthia MacGregor, 69, a freelance writer and editor in Palm Springs, Fla., who found herself, for the first time, falling victim in the aftermath of the recession and pawning her mother's diamond ring last year. "I guess I never lost the part of my upper-middle-class upbringing that looked down at pawn shops."
The stereotype that if you visit a pawn shop, you're somehow in league with the dregs of humanity, is pretty much over. But a loan is a loan, and it's a serious business, so if you're considering pawning an item, here's what would be helpful to know.
What to expect. You probably have some understanding of how the process works: You select an item you own that you know has some value, and then, assuming you aren't doing this online, you head to your local pawn shop to try and get a loan based on the worth of your possession.
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"You walk in with your item, you negotiate a price, and once you finalize the price, you have to produce your identification, and after that, we'll fingerprint you," says Les Gold, the owner of American Jewelry and Loan, a pawn store with two locations in Detroit and Pontiac, Mich., and one of the stars of Hardcore Pawn.
"We fingerprint everyone for everything that comes in, and then we forward that information to the police as every pawn broker does, to make sure we aren't dealing with stolen property," continues Gold, who says this is how it generally works in every pawn shop in America. "You're issued a ticket and you get your money, and you leave. The whole process can take three or four minutes."
Online pawn stores. They're a good fit if you want a larger loan—for example, a few thousand dollars—and if you don't need money today. For instance, Pawngo.com offers loans from $500 to $1 million. A customer settles on what they want to pawn, answers a few questions on the website, and then an initial estimated offer is made. If the customer accepts, he or she can print out a prepaid FedEx label to send in the item, or have a package with a prepaid label sent to his or her home. The evaluators at Pawngo receive the item, look it over, and if it's accepted (they need to make sure your gold watch isn't a fake), they'll send you your money within 24 hours.
"[With] our typical customer, something has triggered a cash-flow problem in the household ... They aren't living paycheck to paycheck," says Todd Hills, CEO of Pawngo.com, headquartered in Denver. He says the Internet is ideal for his clientele because pawn makeover or not, "in certain parts of the country, pawn shops can be a little intimidating to walk in."
How the loan works. You have to pay the loan amount back, plus fees—usually interest and a storage fee—by your deadline, which is typically a month or several. If you don't pay it back by then, the pawn shop has the right to sell your item. But pawn shops are often happy to extend the loan, since that is, of course, a big part of how they make money. According to the National Pawnbrokers Association, 80 percent of all customers do end up reclaiming their items.