General Question

squirbel's avatar

How do pawn shops work?

Asked by squirbel (4292points) February 28th, 2008 from iPhone

Every time I see them in movies they are associated with such negative circumstances, like people who are broke. But I always find such great things in them for low prices. What is the business model exactly?

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4 Answers

ironhiway's avatar

They’re like legal loan sharks.
People who need money that have something of value, rather than sell it, they can pawn it. The Pawn Shop loans money and holds the item as collateral. The interest rate is high. The person must make regular interest payments to avoid losing the item. If they pay the loan off they get the item back.

Often they fall behind in the payments or they really didn’t care about the item in the first place. It then becomes the property of the Pawn Shop. Because of the high interest the Shop ends up with a lot of stuff at a low cost.

Their aren’t that many people like you who have found what great bargains there are to be had. So the prices remain low.

Pawn Shop’s have a poor reputation also because they have been associated as places where people take stolen goods and with drug addicts who pawn there stuff or their families or friends stuff to get their next fix. This reputation has been enhanced by the way their portrayed in many movies.

ishotthesheriff's avatar

i love them
banjo for $99 [:

squirbel's avatar

next question : what is a loan shark?

ishotthesheriff's avatar

”- One, usually mob-connected, who loans money at a high weekly interest rate.
www.moldea.com/glossary.html

- usurer: someone who lends money at excessive rates of interest
wordnet.princeton.edu/perl/webwn

-A loan shark is a person or body that offers illegal unsecured loans at high interest rates to individuals, often backed by blackmail or threats of violence. ...
en.wikipedia.org/wiki/Loan shark”

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