There was a blurb on the morning news this morning about the sudden surge in popularity of pawn shops. Pawn shops, in case you’re not familiar, function as a sort of bank: you bring in something (jewelry, often, or electronics. Guns. Stuff like that, although I’ve been at pawn shops and seen baby strollers) and the pawn shop owner gives you some cash. If you can repay the pawn broker in a given time, say 7 days, you get your stuff back. If not, the pawn broker resells it, obviously for a profit.
Now I know what you’re thinking: what does this have to do with me?
Two, maybe three things.
First: if you’re short on cash and considering a pawn shop, stop and think it through. This might not be the best idea you ever had. If you can’t raise the money to repurchase your own stuff, you’re going to lose it. Someone else will buy it, it will be gone forever, and if this is something near and dear to you, it hurts.
Never pawn anything you can’t bear to live without.
Secondly, if you’re functioning on the assumption that you’re likely not to get the item back (let us be pragmatic here: sometimes that is truly the case) pawn shops do not pay top dollar. You’re going to realize a higher price by selling the item outright: either to a flea market dealer, through the classified ads, or on eBay or a similiar auction service.
Finally, and this is where we shift mindsets, I’d urge you to proceed very, very cautiously before acting as a defacto pawn broker yourself. Pawn shops are surprisingly tightly regulated. This is in part due to the fact that one of the most efficient ways to move stolen goods is via pawn brokers. People who do this as their business know how to handle the issue of stolen goods. You, acting as an individual, have neither the training nor any legal protection whatsoever if you’re found to be dealing in stolen goods. Worse, it may be illegal in the state you reside to act as a pawn broker without the proper permits and licenses. Check with local authorities if you’re determined to do this.
Additionally, you’re putting yourself in a very bad position: people often react badly when they discover you’ve sold the item they left with you as collateral — even if the time you’ve agreed upon has lapsed, two or three times over! Avoid the heartache and stress by purchasing things from people outright, for keeps, to do with as you see fit.
You always want to keep track of where you get the things you later re-sell. This is good common sense anyway: you want to make sure you’re realizing a profit, and it makes end of the year accounting much, much easier. If you do purchase an item from someone that later turns out to be stolen goods, when the police come knocking, you can tell them exactly when you bought the item, what you paid, and where and who you sold it to.
There are some clear indicators that the economy is not doing well. The spike in pawn shop usage is one of these indicators. While it’s tempting to take advantage of this trend, I would advise proceeding very cautiously.