Credit Rating Worries

I haven't posted anything in a while because I left the company I worked for, but after some personal issues prevented me from working for the company I left for I'm now back at the pawn shop as an Assistant Manager. I'm glad for the opportunity to reenter the pawn business and look forward to the coming experiences as well as contributing once again to this blog.

While working a couple of days ago, a customer raised a very legitimate concern that I often overlook. This customer was putting a loan under his name for a friend who had forgotten his ID. It was obvious to me that this customer had not taken out a loan at a pawn shop before because he was very skeptical and had a lot of good questions for me. One of which I would like to address in this post.

This customer, we'll call him Bill, asked if we would report it to the credit bureaus if his friend let the loan expire without making any payments. When I told him that the loan wouldn't affect his credit rating whatsoever, he was still skeptical and didn't fully believe me.

This is the point I made with Bill. A pawn shop, though considered a financial institution, won't (I haven't heard of a pawn shop that would, anyway) report to a person's credit on a defaulted loan because we already have the collateral for the loan in our possession. There's no reason for us to report it when it doesn't cause us to lose money. In other words, though we may be out a certain amount of money for the time being, we can sell the collateral and make the money back and (hopefully) even make a decent profit.

This is another reason why I would argue that receiving a collateral loan at a pawn shop is much less risky than a check cashing or payday advance store. If you were to let a payday advance go delinquent, the store would most likely charge you extra as well as having a hugely negative impact on your credit rating. They can also be sent to collections and quite possibly turn into a judgement on your report or lead to garnishment of your wages.

Pawn Shops and the Police

I recently read another blogger's post about going pawnshopping in his area with a friend of his. He said that when they pulled up to the first shop, there was a drug bust going on right outside. He suggested that this was typical pawn shop activity and that he was not surprised at all. He went on to say something about how the only reasonably priced items he saw that day were the guns, which were "probably used in a murder".

Those of you who have sold firearms for a business or even bought from a business should know how wrong that statement is. Pawn shops share a close relationship with the ATF, just like any other firearms dealer. After going through a week-long, annual inspection conducted by them there should be no doubt in anyone's mind that the firearms have a clean history and have not been used in any major crimes.

I also hear a lot of people talk about how everything in a pawn shop is most likely stolen. This is far from the truth, as most local governments have a "banned list" of people that have been convicted of theft in the past. These lists are distributed among the pawn shops in the area and the penalties for doing business with them are steep.

There are numerous programs in place across the country to help people recover their stolen items. In Nebraska, where my shop operates, we are required to take down a list of items we take in, along with the pledger's fingerprint and serial numbers for the items they bring in. Every morning we mail the previous day's pawn forms with all of this information to the crime analysis lab. Most state's will have a program like this, or at least similar to it.

As pawnbrokers, we cannot stress enough the importance of keeping a record of serial numbers for the items you own. If something is stolen from you and finds it's way to a pawn shop, reporting the serial number almost always ensures the item is found by the police and proper procedure can take place to get it back in your possession. I've found a company based out of Kansas that has a program in place that I think should be adopted everywhere. Check it out, Record It & Report It.

Pawnshop 101

Hey all, and welcome to my first post! I know you're probably not as excited as I am, but we'll get you there. ;)

I have the privilege of working in one of the most stereotyped businesses in America, the pawn shop. I've worked for the same company for over three years now and for some reason thought that everybody else's perception of the business would change with mine. How wrong I have been. I recently got married to a gorgeous young lady and had to explain what I do to a whole other group of people. Her family would ask me where I work, I'd tell them a pawn shop and it was always the same response: "Oh, how...nice."

My goal here is to familiarize people with pawn shops and how they work while having a little fun relaying the more odd stories of an everyday life at a pawn shop. This might expand into more someday, but I won't get too far ahead of myself.

At this point in America's life, the economy isn't faring too well. There is an abundance of high interest loans, cash advances, and credit card debt that is bringing the economy into what more than a few people are calling a recession. People are looking for a quick buck and getting caught in extremely high interest cash advances that will ruin your credit if you don't pay it back.

This is where the pawn shop can help you. Throw out those pictures in your head of the old scurvy guy sitting behind steel bars, smoking a cigarette and telling the police where they can shove it. That is very rarely what you'll find on the inside of the pawn shop. In fact, it's usually quite the opposite. At my store, cleanliness and organization are highly prioritized and most people are surprised when they walk in for the first time.

This is a brief description of how a pawn shop works. Let's say you're in need of some money. The dog (or cat for the "off" people out there) got hit by a car and has a broken leg that needs immediate attention (of course, for PETA's sake, the dog is all right in the end). You've now got an emergency vet bill to pay, but what if the gas tank is on empty or the baby needs diapers? That's where we come in. You bring us an item (what kind of items shops accept varies by the shop), we tell you how much we can give you on a loan and the rest is up to you. The interest rate and paperwork will vary on the shop and local laws that apply, but I'll give you a run down of how we do it as an example.

Let's say you brought in some dvd's that we loaned you $50 on. For us, it's a four month loan at 15% a month (a heck of a lot lower than cash advance rates). That means the monthly interest charge will be $7.50. If the loan was done today (03-04-08) the due date would be 07-04-08. If you picked them up before 04-04-08, it would only cost you $57.50 (the $7.50 would roll over on the 4th of each month). That's it! Now you can fill up the tank, get diapers, and still get your dvd's back with your next paycheck. For us, loans range anywhere from $5 (gallon of milk, or...erm, pack of smokes) to $5,000 depending on what you bring in and how much you need.

So, what happens to you if you don't want/can't afford to come back for your stuff? NOTHING! We don't affect your credit and we don't care if you have horrible credit. It's all good with us.

What if you don't need money? You can still benefit from a friendly relationship with your local pawnbroker. Don't forget, there's deals to be had at every pawn shop!

My goal for this blog is to give you honest, straightforward facts about pawn shops and the advantages of utilizing our services. I'm not as naive as to say all pawn shops will work like I say, as I'm sure there are those out there that come close to fitting the worst stereotypes. But, if you have a bad experience your first time at a pawn shop, don't let that stop you from checking out others. Be sure to check back soon for more good stuff!