Pawn Shops

General Questions
#1

I got to thinking about stores that sell used merchandise, such as used bookstores and pawn shops, and how they started out. Where their initial merchandise came from. It quickly dawned on me, that in an example like a used bookstore, they probably start with a personal collection, and/or go around and buy up estate and other collections until they have enough used books coming in from customers. Come to think of it, they probably continue to purchase large collections from estates and whatnot.

But how about a pawn shop? Let’s say I’m opening up “Anamorphic’s Pawn Shop”. Do I just open up an empty store and wait for people to come and pawn me their crap, and then hope they don’t come back for it so I can eventually sell it at a profit? Or do I go around to yard sales and just buy a bunch of used crap to get my start? Anyone here in the lucrative pawn industry?

#2

I suppose you could start off with bare shelves. After all, pawn shops are primarily in the loan (shark) business - you’d be offering CASH RIGHT NOW! for almost any and all goods, so you would acquire an inventory soon enough.

#3

Pawnshops make most of their income from interest on loans. According to the National Pawnbroker’s Association, 70-80% percent of all pawns are redeemed. The sale of unredeemed merchandise is a small part of their income. Because of the overhead involved in retailing unredeemed merchandise, I am sure most pawnbrokers would prefer that all pawns were redeemed, and nobodies “crap” had to be resold.

#4

I guess, as opposed to a resale shop, you have to consider what percentage of those pushing themselves through the door of a pawn shop are there to shop for goods versus those who are there to pawn an item.

#5

I worked in a pawnshop for 5 years. Some shops DO start out with nothing. Others buy used merchandise from out-of-business stores. Some will offer low-to-medium quality new merchandise. As mentioned above, the pawnbroker wants the client to redeem his pawn. Selling used mechandise can be difficult. A lot of times, the shop ends up eating the item by selling it for what they have in it. Most shops make a TON of money on interest (20-33% is the going rate). You’d be amazed at how many people will pay fees for months and even years on an item. One guy had pawned a gun so that his wife couldn’t get it in a divorce (property belongs to the pawnshop for the duration of the loan since it’s collateral). The gun stayed in pawn for FIVE YEARS! The guy had paid about 3 times the value of the gun during that time.

#6

The pawnshop Fear Itself linked to advertises rates “from as low as 5% per month.”

60% APR, as a minimum? Yikes! :eek:

#7

Just called a pawn shop owner friend of mine, and she said that a great many pawn shops these days are franchises, and you (or whoever) are provided with a start of stuff and some is even provided as time goes by if there is a glut of a particular item in a specific area or you’re area has a absense of an item or items (She said Vegas is an excellent source of musical instruments).

She said that she became a pawn shop owner by way of a second hand/antique store. People just kept coming in and pawning stuff. She said it is much, much more profitable than the second hand sales, but it is also much more regulated by the communities her shops are in. The shops are only allowed in cetain areas and only permited to be open at certain hours. She also said that there is a much higher incidence of robbery.

She didn’t say it, but she has become quite wealthy as a pawn shop owner and has branched out into a number of other more mainstream fields, like real estate, used cars and jewelry.

#8

5% per month compunded monthly is closer to an 80% APR.