Everyday Cheapskate: My Sincere Apologies to Pawnshops Everywhere
In the wake of America's big economic wake-up call back in 2008, dollar stores and thrift stores saw a big resurgence. And now another kind of retail quasi-lender is commanding all kinds of attention from sellers and buyers: pawnshops.
I admit to having grown up with a weird bias against pawnshops. To me, pawnshops were just one level above Vinny the Loan Shark operating illegally in some dark alley in the bad part of town, just waiting to break some knees.
Where did that come from? I have no idea, really, but let me quickly follow by saying it is a most faulty stereotype.
Pawnshops are respectable businesses that offer a viable service in many communities. And these days, thanks in part to Rick Harrison, whose family owns the Gold and Silver Pawnshop in Las Vegas and who stars in the History Channel's "Pawn Stars" -- one of my personal favorites -- business is booming.
What is it?
A pawnshop, owned and operated by a licensed pawnbroker, makes secured loans on personal property left in the broker's possession to be held as collateral. The property can be redeemed by the customer when the loan plus a finance charge (think: interest plus per-month service charge) is repaid.
What are the costs?
Total fees charged by pawnshops, which, in nearly all states, are regulated by state and local laws, can range from 5 to 25 percent per month. That's high, I know. But remember we're talking very short-term loans.
What are the terms?
When a pledged item is not redeemed according to the agreed-upon terms, pawnbrokers are required to notify the customer that the loan period has expired, giving him or her a final opportunity to redeem the property.
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