How comes an interest rate of 10% per month doesn’t fall afoul of usury laws?
I am a regular buyer of tools at a pawn shop. I see a big difference in quality between pawn shops----both in business practices and the inventory they’re willing to buy. The one I go to is a very reputable place.
I’m a regular so haggling/bantering is part of the process. My opening line is usually something like, “So…this price is a conversation starter, huh?”
They use Granger, Home Depot and eBay regularly to assess retail value. (They’ve mentioned it when I’m haggling) They’re prices are sometimes too high in my view, but many, many times I’ve found an absolute steal.
I often call a friend from the pawn shop and have them look up the retail price. If it’s way too high, I don’t even start.
Overall, It’s a great place for me. I come educated on pricing, and I’m always willing to walk away.
As I understand it, it’s because you’re not actually making a loan but a pawn. In Oklahoma at least, they’re treated differently. They’re both under the auspices of the Oklahoma Department of Consumer Credit but the laws are different.
Interesting, most of the places I went to where new car dealerships with a used car section. Is it really worth waiting for the person with bad credit who isn’t going to check what the car is worth? I don’t see how holding on to a car for 5 months and paying interest on it while it depreciates helps in any case. I guess if they paid to much selling at a reasonable price would be a loss but I don’t see how they stay in business long at that rate.
A side note, my first post kind of looks like I spent 5 months looking for a car at a good price. That is not the case, I found a car at a reasonable price in a couple of days and drove by the dealerships five months later on my FU tour 
I agree. I definitely don’t have that kind of time. It seems like giving anyone off the street a decent deal would suit everybody. In my experience pawn shops don’t pay very much for their merchandise.
I agree that the ‘don’t own a car crowd’ might not have the option of buying at a regular store but it has already been mentioned that doesn’t fit fit some pawn shops including the pawn shop near where I live, in fact it’s in a location that is pretty difficult to get to without a car.
A lot of the pay day loan type of places get around it by calling it a ‘fee’.
Better than the impression I got, that they only want to sell to people who are too stupid to know they are getting a bad deal.
I took two things out of it. First, if you’re not expected to be a regular customer, you can pay the listed price. I’m not going to spend 20 minutes discussing the item, and the price, and haggling with you over $10, when I’m never going to see you again.
Second, some items get a rock bottom price because it’s not worth the space or effort to squeeze profit out of it. Others get a sky high price because it IS worth the space/effort to have someone pay full retail (or higher, if they are particularly dumb). Shit, you can look up the prices of 50" TVs in a newspaper ad that costs you 25 cents, (or nothing if you go garbage picking) there’s no excuse for paying over retail price.
As a customer it certainly isn’t worth 20 minutes of my time to save $10 and there is no way I would even consider doing it. I am definitely not going to pay retail or more for a battered used item.
I would think the pawn shop would figure things along the lines of - Retail of this item is $100, I paid $25 for it, I’ll sell it for $60 make a small profit and only spend the time it takes to ring it up.
It seems like the answer to the OP is some people think it is worth holding onto an item for months until someone foolish enough to overpay by a large margin comes along. Still doesn’t sound like the best way to run a business to me.
<hijack> Where the hell can you buy a newspaper for only a quarter? Around these parts, the daily papers cost a buck each…and don’t get me started on the Sunday papers. I don’t know if the library has the separate ad sections in the papers that are available to read, but many ads are in the body of the newspapers.<hijack>
Back on topic, when I was looking for another TV set, I looked at a few pawn shops…and I was amazed to find that the used sets were more expensive than the ones I could buy new at regular retail outlets.
Only a personal anecdote:
I just went through exactly this issue.
I saw a full sized brass and copper diving helmet in the window of a pawnshop and actually stopped to see what they were asking. It was used and very slightly damaged and after hearing their price I used my phone to bring up the website where the helmet came from and found it for $10 less. Granted it was on a clearance sale and I would have paid a good bit for shipping but still. When I showed the guy the on line price and asked if he would take less he told me to leave the store. That was my first and last trip to any pawn shop.
There are jerks in any line of business. The only people that we ever told to leave the store were those that came in with loaded weapons. Our policy (it wasn’t my idea) was to confiscate their bullets and tell them not to come back. If they wanted their bullets back, we told them that we would call the police and let them straighten it out. This was in the days before concealed carry laws.
To slightly defend pawnbrokers, the have to put up with a lot of crap and grief that the people that come in the stores to purchase things don’t see. After years of people begging you for a little more money for their items so that they can buy “food for their children”, you get a little jaded. You want to help those that really need it (if you can) but at the same time you know that the majority of them are just trying to scam you.
It’s no excuse to act like a jerk but I can assure everyone that working in a pawn shop is absolutely nothing like you see on “Pawn Stars”. “Hardcore Pawn” or whatever it’s called is much closer to the norm.
A while back I was in the market for a guitar, so I checked out a pawn shop. They had a Yamaha that looked like Marmaduke had been chewing on the fret board and they were asking about 30 bucks less than you’d spend for a brand new one from Amazon or the Guitar Center. I snorted and left. I don’t see how they sell any merchandise at all, if that was an example of their business model.
When my husband was out of work, we sold some power tools to a pawn shop.
One was a miter saw that we’d used maybe a dozen times. It was 10 years old. They said they probably wouldn’t be able to sell it, but they’d give us $50 for it.
We went by a week later and they had it on sale for $395, nearly 4 times what they gave us.
They hadn’t even cleaned it. A week later, it was gone. We’d paid less than $200 for it.
We didn’t do that again.
You are right about cars sitting there for a long time. The fact is, most new car dealerships make their money on servicing, not sales. You just can’t make much money on most new vehicles these days, customers are internet-savvy, and know exactly what the dealer paid for the car.
Some dealerships have good used-car managers, and actually make more money off their used-car operations. Other dealerships employ idiots, and just don’t make as much money.
A lot of making money for big dealers is location. A fairly incompetently-managed dealership can still break even in a good-enough location. Small-town dealers often make money simply through selling to people they know. Again, they don’t need to be all that competent to at least make a living.
Most of the time, a dealer who makes most of their money selling online is fairly well-managed, and will behave professionally, and not screw you badly. You still need to do your research, though. Texas Direct is eBay’s biggest dealer, and they screw people hard, by photoshopping the dings/scratches out of their cars’ pictures, getting people to fly in from halfway across the country to their in-the-middle-of-nowhere location, and then giving them the hard sell.
The best dealers to deal with are ones like my buddy, who sell about half their inventory online, or a little more. If they can sell a decent number of cars to walk-ins and locals, then they are not shady like Texas Direct, and are more or less trustworthy (for a used-car dealer, ROFL). Also, if they’re selling a lot on eBay, you know they’re buying them cheap, so they are a LOT more willing, usually, to negotiate a lower price, faster.
Nice touch, the snort.
mmm
You guys know there are your granddad’s pawn shops then there are publically Traded enterprises that run pawn shops:
http://data.cnbc.com/quotes/EZPW
I recently decided to try my luck at a pawn shop to sell some jewelry. The DVDs there were a dozen for ten bucks. Granted none were this years but still, I was able to find 12 I wanted with no problem at all.
I was also able to buy my daughter an electric guitar and used amp for under 100 dollars and they gave me 75% of scrap value for my gold. I think it depends on the pawn shop and the area as to whether or not you can get good deals and as someone said above, whether it is a local business or a chain. I wonder if a chain has a list of prices they are able to offer without negotiation?
Maybe they count on customers who are bad at math.