In the last few years, the global financial crisis has played havoc with many industries. One industry, however, thrives in difficult economic times. The pawn industry.
Once seen as somewhat shady or underhand dealers, only for the bottom end of society, in recent years this has changed. The middle to upper class are seeing the benefits of the business model, and the pawn industry has experienced a resurgence and a new respectability.
Pawn shops are legally licensed businesses that loan money against personal property (collateral). Pawn shop owners are professional and knowledgeable individuals with a great deal of experience in valuing various items.
Common items to pawn include gold and other precious metals, jewellery and watches, cars, caravans, boats and jet skis. Business plant and equipment is also a good option. In fact, if an item is worth money, there is likely a pawn dealer who will convert it to cash.
The process is simple. You bring your item in to the pawn shop and the dealer will take a look and give you a value that they will loan against the item. While this will be less than the 'new' value of the property, it is often as much as you could get for the item if you were selling it outright. Once a price is agreed upon, a legal loan will be drawn up and signed by both parties. Usually the term is three months, but often if you are unable to redeem the item at the end of that period, the loan can be extended. This will incur additional fees and interest, however.
The pawn shop will hold the property until the customer can repay the loan, at which time the customer retrieves their property. If the customer cannot repay the loan in the agreed upon time frame, the pawn broker keeps the collateral item, and can resell it to make a profit.
Pawn shop owners are required to document all loans, and if required report that information to law enforcement and other government agencies. The industry is well regulated and professional. And therefore has a wider appeal to a wider demographic.
The global financial crisis hit all levels of society, and people are realising that rather than selling their prized jet ski, caravan or gold, they can pawn it and take a loan against it. They get cash fast, often as much as they would get by selling the item in the classifieds, and they still have the opportunity to retrieve the goods.