Why are pawn shops so expensive?

To avoid a hijack from another thread:

This has also been my experience. When I worked downtown, I stopped in the pawn shop down the street maybe twice. In addition to being really seedy, the merchandise there that I happened to be familiar with was way overpriced.

I can’t imagine that they paid anywhere near that to get it in the first place, and the price disparity discouraged me from even mentioning a lower offer. Who are their clients? Are they expecting the original owners to reclaim it at that price? :confused:

The price of the merchandise covers the cost of what ever the original loan was for, in effect to get the
loan, you pony up something that the pawn shop buys, and then they resell it back to you.

Like anything else, if it stays on the floor too long, most places will knock off the price point, until it moves. Usually merchandise will stay in the back for thirty days, so at any point, police can drop by and check out the stock, and match it possibly against stolen goods.

If the stock on the floor seems sparse, its because they do more business with payday loans, the stock they do have is for the legal fig leaf.


Answering your very last sentence: when you give an item to a shop, you have two choices. You can either sell it outright or pawn it. In the former, you could rebuy it for a high price like any other customer. If the latter, then it’s like getting a loan with the item as collateral. They can buy it back once they have the funds, and it will likely be less than the sticker price.

Former pawnshop employee checking in. Our general goal was to double our money on the sale of all used items, be they purchases by us or pawned items that weren’t picked up in the allotted time. Consequently, we didn’t care if someone sold to us or pawned their items. Our offer was the same. If you sell me something, I’ll put it on sale in 10 days (a holding period was required by the Tulsa police). If you pawn something and don’t pick it up within 60 days, I’ll sell it then. If you tell me that you’re going to pick it up and should therefore somehow get more money, don’t expect me to believe you. I’ve heard it all before and at any rate, it doesn’t make your item more valuable.

In order to double our money, we would usually offer about 1/4 of what we believed to be the new retail price of an item. We would then price them at about 2/3rds of the new price and settle for 1/2 when offered. Guns are a notable exception. They hold their value much better than tools, electronics, etc. Jewelry loans were the most depressing. The original retail markup on jewelry is outrageous. We would pretty much offer the scrap value of the gold and diamonds. It isn’t much.

I always thought it was the opposite. You gave more money to people that are selling the item than those that merely want to take out a loan on it. This way if they don’t come back,you’re compensated. Actually I am sure I have heard this as fact. Do some shops work this way?

Ours certainly didn’t work that way and I can’t think of a reason that one would. Look at it this way, we want to loan you as much as we’re willing to buy an item for because if you do come back and get it, we’ll get the most amount of interest. If you don’t come back, it’s just as if we originally purchased it. The only downside from our perspective was that we had to wait longer to put the item on sale. For us, that wasn’t a consideration.

So when a pawn shop tells me a price on something do they expect me to make a counter-offer?

I’ve been looking for a Blue-Ray player and I’ve checked some pawn shops. But they’re asking eighty or ninety bucks for them. For that same amount of money, I can buy a new one at WalMart or Sam’s Club. I’d consider buying a used one if they were asking thirty or forty bucks. Should I be offering that?

I’ve only visited pawn shops a couple of times in my life, but each time my mind would boggle at the price tags they would have on ancient used computers. Hint: An 8 year old personal computer is not worth $500*.

*I’m sure someone will come up with a counterexample, though.

You know, until now I had no idea that pawn shops provided a loan service while holding your item as collateral.

I had always assumed they were simply in the business of buying stuff (which I thought was mostly stolen goods) and reselling the items for a profit.

I see that’s only one part of the business model.

I’ve only gone to a pawnshop once, and it was to buy a playstation (a few years after the playstation 2 had been out, even), and a game and memory card… and I remember it being a real bargain! I haven’t been in a pawn shop since then though… but not ALL of them are ridiculously overpriced :slight_smile:

It can never hurt to counter. We almost always gave people our lowest price when they would ask “What’s the least you’ll take for that?” but different shops will have different cultures. The pawnshops know what new Blu-Ray players are selling for too. What has probably happened is that they took one in pawn when the new ones were selling for $150 and they might have given $40 for it. They’d then mark it around $80. With electronics, if they don’t sell pretty quickly, they’re soon overpriced. This is a VERY common occurence. If you’re really interested, just say “I’ll give you $50 cash for it.” If it’s more than they’ve got in it and it’s really overpriced, there’s a decent chance that they’ll take it. If they don’t, don’t be offended, they just think that someone will eventually give them $60 or $65 for it.

2/3rds of what was pawned in our shop was reclaimed by the owner. At 120%/year, you’d think that you’d make a lot of money but you really don’t make much off of loans. A typical pawn would be for about $50. If the owner comes back within 30 days, they’d owe us $55. $60 after 2 months. After that, assuming that the owner hadn’t paid the interest to keep the loan active, we’d put it on sale.

Regarding stolen goods. We were required to fill out a little police report of every item that came into the store. We required a driver’s license or some other official form of ID. All of your personal info, a full description of the item and your fingerprint went onto the form. We’d mail the forms to the police department every day. If the police notified us within 10 days, we’d put a hold on your item and wouldn’t let you get it back (rarely an issue with stolen goods) until the police released it. The police put holds on items less than 1/10th of 1% of the time. I have no doubt that a far greater percentage of items were stolen but there’s only so much that the store and the police can do.

Sam’s and Walmart are not in the habit of opening stores in the same neighborhood as pawn shops. Many of the people who live in neighborhoods with pawn shops don’t have transportation to get to a Walmart or Sam’s.

In fact, the loans are precisely what makes it a pawn shop, as opposed to a used goods shop.

I have had the same experience as the OP, everything in the pawn shops I have been to looked overpriced and the things that I knew the value of where definitely over priced. Like 90-100% of the cost of the same item new (one item I specifically remember was a PlayStation selling for more than brand new one). The pawn shops I have been to also seem to have had no interest in negotiating the price :confused:

Yes, at the pawn shops I’ve been to, not only was the merchandise grossly over priced, the owners/staff got angry at even moderately lower offers.

I don’t bother to shop at pawn shops. If pawn shops really sell stuff, it is to people who, for whatever reason, don’t buy at Walmart or “dollar” stores. Perhaps the pawn shops are taking something else in trade besides cash.

My town’s an exception. The WalMart and the pawn shop share a parking lot.

I actually shop at pawn shops quite a bit. But what I go there for is DVD’s. They’re a good place to buy DVD’s which are usually two dollars apiece. Which makes them a bad place for people to sell DVD’s because I’ve heard they only get seventy-five cents for them.

Same experience here. I worked in retail electronics for a long time and knew model numbers, model years, and prices for all the major brands of home audio gear. I’d see last years model, used, priced at $185 at a pawn shop when I could get a brand new this years model at Circuit City for $200. And it was something they probably bought off of a guy for $15.

I was in Key West and wanted to but a diving watch. I bought a Seiko at a Pawn Shop for 50 bucks. We went to Disney the next week and our waiter in the Italian restaurant had the same watch, he said he paid 500 bucks.