PAWNBROKERS: A HISTORY OF HELPING
The House of Lombard’s operated pawnshops throughout Europe. King Edward III of England is said to have frequented these pawn stores during the 14th century. Christopher Columbus’ journey to the Americas was financed by Queen Isabella pawning the crown jewels.
America’s first loan … Did you know that the American Revolution was financed by a pawnbroker named Hiam Solomon? To honor Mr. Solomon, a Jew, the Star of David was used as engraving years later on the back of the $1 bill to give credence that America stands for freedom of religion.
WHAT IS A PAWNBROKER?
Pawnbrokers, also known as collateral loan brokers, make loans based purely on the intrinsic value of the collateral. Checking the customer’s credit history is not necessary because only the value of the item being pawned is considered.
WHY ARE WE NEEDED?
More than 56 million people do not have a bank account or credit card. In today’s diverse society, many people depend on pawnshops to help them meet their daily financial needs not met by other financial institutions. Our customers represent the working families of America who have an unexpected need for a short term loan. Pawn loans keep the electricity on, rents paid and cars working. There’s no better place than a pawnshop for people who need to raise cash quickly. Many clients use pawnshops as their “safety net” when emergencies arise to get quick cash or they may have a seasonal job and need a loan to tide them over the slow months when traditional banks won’t.
The typical loan customer pawns merchandise because they can receive 50-70% of their items wholesale value. Customers have up to four months to reclaim their merchandise and a ten-day grace period in order to renew or redeem the item. More than 85% of merchandise pawned is redeemed by the borrower.
The average pawn shopper is a bargain hunter or curio seeker, looking for that one-of-a-kind estate ring, vintage electric guitar or rare coin. Usually these are shoppers who don’t need to shop at secondhand stores, but prefer to because of the eclectic nature of the merchandise and the good deals they run across. In fact, almost 60% of pawn customers earn between $35-75k per year.
Today’s pawnbroker may be an entrepreneur operating a single location or a larger company with multiple locations around a city or state. This growing competitive industry is working hard to upgrade the image of pawnshops and to offer needed services to the public.
WHO REGULATES US?
The pawn industry is one of the most regulated in the country. Most regulation has been initiated, sponsored and supported by the pawnbrokers. Working with law enforcement has always been an important part of operating a pawnshop. Pawnshops comply with all federal, state and local regulations.
Regulatory agencies that govern the pawn industry include the Office of Consumer Credit as well as local, state and national law enforcement.
To safeguard pawnshops from accepting stolen property, customers must present State approved picture I.D., full customer information, fingerprint and a full item description to receive a loan. All loan transactions are then reported to law enforcement. Due to thorough regulations and reporting, less than 1% of all pawned loans are ever questioned by law enforcement.