Trek The USA: pawn

Monday, January 14, 2013

Do Reality TV shows benefit or hurt the industries they cover?

Reality TV. It seems that there is a show for just about any industry, occupation or lifestyle. Deadliest Catch, Storage Wars, Pawn Stars, Parking Wars, Gold Rush, Extreme Couponing and many more. I’m not talking about game shows like Survivor, The Amazing Race, Big Brother, America’s Got Talent or anything like that. We all like to see someone else succeed in their business cause it gives us normal folk inspiration and hope that we can do it too. But do these shows do more harm than good?

I like Pawn Stars to a certain extent because it shows the business aspect of the pawn industry and the team at Pawn Stars for the most part, seem to be on the level and ethical. Obviously, when selling or pledging your items to a pawn shop, it comes down to who offers the best deal. Most customers fail to realize that a pawn shop has to buy an item at a price where they can make a profit when they sell it. But I have seen many instances where the staff of Pawn Stars have gone above and beyond the ethical standards to ensure that their customers are getting a fair deal, even when the customers tend to be ill-informed or greedy. I’ll use the Faberge Spider Brooch as an example. The seller came in asking for $2,000 for her brooch which she did not know much about. The “Old Man” without hesitation offered $15,000 as his final offer but yet the woman decided that if he would offer $15k, he would offer more. While there is speculation to whether or not the brooch was authentic, the point is that the “Old Man” could have just took her $2,000 offer and made a killing but he knew based on his knowledge of the item that a fair offer was considerably higher than the customer asked for.

On the other end of the spectrum, I think the show Shipping Wars may be bad for the independent the shipping industry. After seeing the first season of Shipping Wars, I would more than likely not use the site uShip to ship my precious items. Grant it that any reality TV series only represents a tiny fraction of the industry, I still feel it represents the industry as a whole. If one person is doing their job a particular way, then more than likely others are as well. Seeing how the drivers handled their loads and their equipment would cause me to be leery of trusting them with my stuff. But I guess that’s what insurance is for. Ironically, I did ship some things cross country using Uship and there were a few hiccups but my stuff did make it within the window. I'll share this story sometime.

In some instances, I think these shows serve as a vehicle for recruiting new people. After watching a season of Deadliest Catch, who wouldn’t feel compelled to try it for a season? Perhaps you might want to hunt down a gold claim to dig for riches? Wrestle crocodiles in the Bayou? Buy a storage unit and see what treasures it may hold?

It’s important to note that while it looks easy to go buy five hundred dollars worth of groceries for five dollars with your satchel of coupons, very few people can pull it off. Of all the lockers you see on Storage Wars, they only show the best stuff and hilarious items but only a fraction of the footage they gather.

In the end, it’s up to the viewer to decide what the show does for them. Most people just watch the shows because they are interesting but some people find that these shows light that spark to try something different.

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Monday, September 17, 2012

How Pawn Shops Work

Sometimes you need a little extra cash and you don’t want everyone to know that you need it. Rather than asking all your friends or your parents for money, many people rely on pawn shops for a quick temporary loan. Some people also sell their items since it’s usually quicker than going through the classifieds or online classifieds and dealing with waiting for potential buyers and the actual process of selling an item. I’ve dealt with many pawn shops over the years and can offer some insight on what to expect.

First of all, you should understand how a pawn works. You bring in an item of value and the pawn shop loans you some money and keeps your item in their possession until you pay back your loan with interest. Typically, you get 30 days plus a grace period of 30 days depending on the state laws. I’ve seen periods from 30 to 90 days so pay close attention on the redemption date and grace period (if any). Also, interest is usually calculated by 30 day periods if you have a 90 day loan, you'll be paying 90 days worth of interest.

As long as you come back and pay off your loan plus interest before the end of the loan period and or grace period (if applicable), you’ll get your item back. If you don’t come back and pay off your loan in the allotted time, the pawn shop becomes the legal owner of your item and will sell it. Depending on the state, you may be able to extend the loan by paying off the interest which means you’ll get another 30 days to pay back the principle plus the reapplied interest. It’s best to pay back your item asap and not roll over your loans.

Pawn shops will loan money on nearly anything thing of value. Electronics, computers and jewelry are the biggest business. Things like DVD’s, CD’s, video games will only get you a few dollars each, even if near new. There is just not much profit margin on these items so pawn shops will not pay anything close to what people expect. Most pawn shops only accept electronics that are pretty modern. Very few shops will take a tube TV, only LCD and LED TVs. Most shops want computers and laptops with Windows 7 or newer. Video game consoles usually go back 2 generations so you’d be hard pressed to find a place taking PS1 or similar. Also, some pawn shops will pass on items they already have a large inventory of.
Many people want to get near retail for their item but that is not how pawn shops work. In the event that you don’t come back for your item, the pawn shop will need to sell your item in order to recoup the money they loaned you as well as make a profit in order to stay in business. So the amount of money the pawn shop will loan you is based on the assumption that you will default (not come back).

If you are getting a loan, generally the pawn shop is going to give you 20% - 33% percent of the current retail value. For most items including electronics, computers and video game consoles, I like to use the rule of 33% depreciation per year. This means that if you paid $900 for a laptop a year ago, the used value now would be about $600. If you bought it two years ago, it would be worth about $400 and so on.

So, using the $900 laptop that you bought last year as an example, you should expect to get about $150 to $200 for a loan. That is about 20% to 33% of $600 which is 66% of the original value. I know, it’s a lot of numbers, but just remember, 33% off the original value and 20% to 33% of the remaining value. However, a huge factor is the condition of your item and if all of the accessories (if applicable) are present. If your laptop is all scratched up, missing parts, then expect a lot less or they may even pass. Just think about what you look for when you buy a used item. Would you want to buy something that is all scratched, dirty and missing parts? Probably not. So the pawn shops try to get the best products as possible

Here are some tips for pawning your items:

Know what to expect before you go in. If your item is worth $1000 bucks, the pawn shop is not going to loan you $1000 bucks. Knock off 33% of original value per year and then expect 20% to 33% of the current value for items of good condition. If your item is in poor condition or missing parts, expect a lot less.
Clean your items before you go in. Make sure you don’t damage your items so use proper cleaning products. Make sure you bring any accessories, chargers, cables, caps, covers or basically everything that originally came with the item. Having the original box is a plus but if your item looks TOO new, be prepared to present an original purchase receipt.
Bring your ID. This is state law.
Don’t be afraid to negotiate but be realistic. Pawn shops will start low in order to maximize their profit potential.
Do not pawn something unless you are 100% positive that you will be able to come back and pay off your loan. Otherwise, you should just sell the item.
Keep your pawn ticket safe as you would cash. Depending on your state, a pawn ticket can be a bearer instrument which means whoever is in possession of the ticket can redeem the item. Most pawn shops will charge a fee for lost tickets. If you lose your ticket, contact the pawn shop immediately.
If you can’t pay off your entire loan on time, go in and pay the interest and at least you can get more time to pay it off.
Don’t pawn items that you can’t afford to lose, like your family heirloom jewelry.
Don’t sell items that have collectible value. Many people watch shows like Pawn Stars or whatnot and I just laugh. Most pawn shops do not deal with antiques and collectibles anyhow. If your have a valuable baseball card, you should go to a sports collectible shop. If you have a huge diamond, you should go to a reputable jewelry store.
Use pawn shop loans responsibly. Again, if you’re not sure if you’ll be able to come back and pay off your item, you should not pawn as you will likely lose the item.

In general, if you do want to sell an item, you should go through the traditional route of classified ads whether through the newspaper or online. You will be likely to get more than from a pawn shop but it can take longer. If you sell an item out right to a pawn shop, you can expect 20% to 50% depending on how new and the condition of the item.

While pawn shops can have seedy reputations, most are on the level and just trying to operate a business but you need to be realistic with what a pawn shop can do for you.