For a lot of people out there, their local pawn shop provides a great way to get some quick cash with little effort. All they need to do is bring in some merchandise—for example, jewelry, electronics, musical instruments, power tools, or other valuables—and trade them in for an easy loan. Sometimes it’s the easiest available option when you need to raise money fast.
Even so, a lot of people are reluctant to visit a pawn shop, even if they have a good idea of how the process works. Why is this? A big part of the problem has to do with the negative image that the pawn shop world has with the general public. Many people out there think of pawn shops as criminal enterprises where thieves “cash in” stolen goods, while others believe that these shops maliciously take advantage of people in their time of need.
Both views are incorrect. In fact, pawn shops play an important role in helping members of the community, and the services they provide are legal and ethical, at least in the case of a reputable establishment like GEM Pawn Brokers.
Still skeptical about the value of pawn shops? Keep reading.
Pawn Shops: A Brief History
Pawn shops have been around for much longer than you probably think. 3000 years ago, pawn shops arose in China as a way to give poor peasants an opportunity to obtain credit. They also operated in the ancient Greek and Roman empires. The history of the pawn shop doesn’t end there, of course—they were around throughout the Middle Ages as well, where the lower classes visited them for funds during bad times. In fact, the English word “pawn” is related to the Latin word “patinum,” which means clothing. That’s because it was a common habit for the lower classes to pawn their own clothing—often the only valuable property they owned—when they needed money.
Yet it wasn’t just the poor who turned to the pawn shops. Even royalty sometimes found them useful, as Edward III of England did in the 14th century when he pawned his jewels for extra cash to launch a war with France.
Closer to the present day, pawn shops provided a lifeline to many people during the Great Depression, when the collapse of the banking system threw society into disarray.
In one form or another, pawn shops have been with us for thousands of years. That’s because they fulfill a legitimate need for a lot of people.
An Alternative Source of Funding
If you have excellent credit and a huge bank account, it’s likely that you’ll never find yourself inside a pawn shop—but not everyone is so fortunate. In fact, some people don’t even have a bank account at all. According to CNN, about 10 million households across the country do not have access to any kind of bank account. People who have to live like this have to deal with a lot of obstacles that others don’t have to worry about. For instance, people without a bank account can’t qualify for a standard payday loan.
However, one option that is available to them is the pawn shop, which will do business with them even if the banks refuse. All they need is merchandise that can be traded in for a collateral loan.
There is another group which often turns to pawn shops: people with bad credit. Some people just aren’t good at managing their money, but others simply run into bad luck. They may unexpectedly lose their jobs, or suffer another type of misfortune that leaves them unable to pay their bills. As a result, their credit score gets damaged, and it can take years to get back to normal.
If they end up declaring bankruptcy, it can take ten years before this gets officially erased from their credit report. In the meantime, a lot of funding avenues are closed to them. They probably can’t obtain a credit card or get any kind of bank loan.
What they can do, however, is come to a pawn shop, which doesn’t care about credit scores. A person with bad credit gets treated the same as someone with excellent credit—the only thing that matters is whether they have an item on which the pawn shop is willing to offer a loan.
A Strictly Regulated Industry
As we have mentioned, many people are under the impression that pawn shops thrive on stolen merchandise, and that professionals in this industry routinely engage in all sorts of shady practices. Nothing could be further from the truth.
The pawn shop industry is subject to a wide array of laws and regulations to discourage the use of these types of businesses for criminal activity. For one thing, pawn shops in New York must obtain licenses from the community where they do business. They must also file a variety of forms with Office of the New York State Comptroller. Shops in other states are required to observe laws and procedures similar to these.
In addition, New York pawn shops cannot by law charge excessive interest rates on the items customers bring in. According to current state law, a “collateral loan broker” such as GEM Pawn Brokers may not charge an interest rate exceeding 4% for up to fifteen months, or for any 15-month extension requested by the customer. The law also forbids the shop from selling an item before it has been in the shop’s possession for four months.
There are other laws as well. The Patriot Act—which consists of a wide range of laws passed in 2001 to clamp down on terrorism-related activities—requires pawn shops to ask customers for a valid ID when doing business with them. Incidentally, this is another reason why thieves can’t rely on pawn shops for easy cash.
An Active Part of the Community
Any properly managed business does more than just take money from its customers—it also plays a healthy role in its community. GEM Pawn Brokers, for instance, has been a cornerstone of the New York business world since it was founded in 1947. Several generations of New Yorkers have come through our doors and found deals that they found acceptable.
Today, we have 28 branches throughout the NYC area. This lengthy track record of success was made possible only because of our commitment to excellent customer service and industry-leading practices.
GEM Pawn Brokers also maintains relationships with a number of reputable New York and nationally based organizations and institutions, such as the American Numismatic Association, the Manhattan Chamber of Commerce, the NYC Police Athletic League, and the Jewelers Security Alliance. Our involvement with these respected organizations imposes a duty on us to treat our customers ethically and responsibly. There are a lot of eyes watching us.
That consideration aside, we pride ourselves on being a trusted, valuable member of the New York business community. We believe we do a lot of good, and we enjoy working with the public.
In sum, when you need to raise cash, pawn shops provide a convenient way to do so—especially if you have bad credit or other problems that prevent you from obtaining funds through other means. GEM Pawn Brokers handles a very broad variety of merchandise: rings, bracelets, necklaces, collectable coins, luxury watches, video game consoles, flat-screen TVs, digital cameras, power tools, electric guitars, automobiles, and much, much more. If you have valuable goods such as these, we would love to hear from you. For reasonable interest rates and first-class customer service, GEM Pawn Brokers can’t be beat.