Pawntique CEO and Founder Explains Online Pawnshops
Let me tell you a little bit about how Pawnshops work.
Pawn shops are really two businesses. First, they buy and sell used items. That is what we see on the hit cable television show from Las Vegas, “Pawn Stars”. Rick Harrison says, “ You never know what’s going to come through that door.”
But the show doesn't often depict clients pawning their item to get short term cash, because most people who are in need of quick cash don’t want to appear on television. However, the majority of pawnshop business is making loans and using customer’s assets as collateral.
The pawn shop will typically loan 50-70% of the second hand value of the item. The percentage depends on how easily the item could be sold if the customer decides he doesn’t want it back. If the customer decides he’d like to have us sell it instead, then we get the best price we can, deduct what is owed, and return the surplus back to him.
Pawn “loans” aren’t really loans at all. The pawn broker actually buys the item and gives the seller an option to repurchase it at the end of the pawn period.
We recently surveyed a number of retail pawnshops in our area to see how they compared with online pawnshops. The lowest rate we found was 10% per month and the highest was 25%. Which makes the 6%, which is pretty standard for online pawnshops, look pretty attractive.
But in fairness, the local pawnshops that have to maintain a retail store probably has higher expenses than an online pawnshop. And they will typically have a large number of small transactions.
Online pawnshops make larger loans and have higher minimums: Here at Pawntique we have a $500 minimum for a pawn loan.
Local shops almost always only pawn for a month at a time but online pawnshops will go 3 months or more. That makes online pawning a better alternative for business people because businesses that have short term cash needs usually take longer than one month to resolve them.
I hope this has been informative. If you would like more information, you can go to our website, Pawntique.com and download our free eBook which goes into great detail about online pawning. Or check us out on Facebook and Twitter.
If you prefer to talk in person, please call me. The number is on our website. Just ask for Don. If you’d like me to call YOU, just email me your number. I’d be happy to talk to you.
Post by Don BattisDon Battis
is the CEO of Pawntique.