Pawn shop business booms amid economy downturn

Pawn shop business booms amid economy downturn

By: AP

By RICK WAGNER Kingsport Times-News KINGSPORT (AP) — Two men came into the Lynn Garden Consignment and Pawn Shop, one carrying a sterling silver chain. Two women came there late the next afternoon with a bookshelf stereo and DVD player in a plastic grocery store bag. The two men left a few minutes later with $35 in cash but without the chain. They had pawned the item to get money for gas and other expenses but said they’d be back in 30 days to pay back the money, with interest and carrying charges, and retrieve the jewelry. “We’re getting gas and stuff,” one of the men said as he left, declining to be identified. “We’ll be back to get it (the jewelry).” The two women left a few minutes after their visit with $40 in cash. They had sold their items outright. “We need money for gas,” Vanessa Pratt of the Lynn Garden area said of the stereo that was hers and the DVD player belonging to her friend, Judy Duncan. “By the time I do what running I do, I’m out of money,” Duncan said on a day gas was selling for $3.69 per gallon at some Kingsport area gas stations. It’s a scenario area pawn shop owners said is repeated much more frequently than it used to be as the price of gasoline and groceries continue to climb, and it’s happening across the country, according to nationwide newspaper and other media accounts on the Internet. A veteran pawnbroker in Bristol, Tenn., said about two-thirds of customers like the men, who pawn items, return for them. But some, like the two women, have no hopes of getting the items back, so they sell them outright. “Most people come back. Two out of three come back,” said Cheryl Brown, manager of Uncle Sam’s Loan Office on State Street in Bristol. “Our sales are up across the board in all departments.” That pawn shop has been in business for 100 years, opening in 1908. Brown, whose family owns the business, said increasing gas prices have increased demand for pawning. “It’s mostly gas and food, mortgages not so much,” Brown said of an increase that began in late February. “Our sales are up across the board in all departments.” Wayne and Tammy Thompson have operated the Lynn Garden Consignment Shop since Dec. 1, 2006. However, because they have had their pawning business open for only a month and pawn payments are just coming due, they don’t really know if two-thirds, half or some other fraction of their pawn customers will return for items. But they and the two other pawn shops report they do know that the pawning and consignment business is booming as people are looking to pawn or sell items for cash, while others are seeking out bargains to buy. The consignment business has a mix of antiques, collectibles, children’s toys and furniture, to name a few things. A laptop computer and car stereo and CD player are also among pawned items at the business, although they will not be for sale unless the owners don’t retrieve them as planned. “We just started the pawning four weeks ago, and it’s been wide open since we opened,” Wayne Thompson said. He said most customers seeking to pawn or outright sell items needed to buy gas or pay utility bills and that he expanded the business because he thought the highly visible location would lend itself to the pawn business. “People are having to watch their money because of gas,” he said. His wife said that folks selling jewelry and other items at yard sales and flea markets generally are becoming more informed about an item’s value. Thompson said jewelry is the most common item pawned at his business, closely followed by electronics. He said tools also are common. DVDs are another common item that end up in pawn shops, Brown said. “Some people think their gold is worth a lot more than it actually is,” Thompson said, while others are pleasantly surprised at what an item brings. In Tennessee, Brown and Thompson explained that by law items that are pawned must be held 30 days past the due date before a pawn broker can sell them. Interest and fees can vary among pawn shops. Brown said Uncle Sam’s charges 2 percent interest per month and an 18 percent service charge. So to get back a ring pawned for $100, the owner would have to pay $120 — $100 in principal, $18 for the service charge and $2 in interest. Or, the owner can re-pawn the item and leave it another 30 days. “It’s like a storage fee in a way,” Brown said. “We have a lot of hunters who do that so their firearms don’t get stolen out of their homes.” Sometimes those seeking to pawn something will decide to sell it instead, but Brown said it is usually vice versa. “If I can’t offer them what they like, they’ll pawn it,” Brown said. Everyone who pawns at Uncle Sam’s must present a photo identification — a driver’s license, military ID, passport or state-issued ID — and make a thumbprint. Pawn shops also keep records of serial numbers and model numbers to assist police in tracking stolen merchandise. Even without the increase in gas prices, interest in selling gold items has skyrocketed since gold’s worth has grown. Although at one time it was bringing more than $1,000 a troy ounce, the current price of more than $850 an ounce means gold is still a valuable commodity. Thompson, Brown and others who buy gold from the public say media attention and advertisements on television have raised people’s awareness about scrapping out gold. Pawn shops aren’t the only place to get money for gold. Some jewelry stores, such as Baker’s Jewelry in Kingsport, will buy gold or take scrap gold and forge it into something new for customers. “It’s a great time for people to do it,” Joe Baker, owner of the store, said of selling old, broken or outdated gold jewelry. He said some people are switching from yellow to white gold and are getting rid of their yellow gold, while others are taking advantage of the higher prices. “We have a lot of people who have just accumulated gold over the years,” Baker said. Although he used to joke about getting dental gold fillings, he said in the past six months or so he gets at least some gold fillings every week. Baker said few of his customers are looking to get money to fill up a gas tank or buy groceries, but they may use the money to travel, put in the bank or buy more jewelry, including sterling silver, tungsten, stainless steel and titanium. “We’re seeing a lot of alternative metals used,” Baker said of new jewelry. Other metals are worth much more than gold, and sometimes for those that are not, sheer volume makes up for the per-ounce price — if you’re selling a whole car. Kingsport Auto Recyclers opened almost a year ago and was paying about $8 per 100 pounds for automobiles and smaller trucks when manager Larry Barr went to work there in October. Now, the price has jumped to $11.50 per 100 pounds. For an average car of about 2,850 pounds, Barr said the yield is $327.75. However, he said older vehicles from the 1950s or 1960s, like a 1968 Ford LTD, weigh in at about 3,500 or 3,800 pounds, while small compact cars might be about 1,800 pounds. He said a 1970s Opal Cadet and a 1968 International Travelall — an early SUV — were among recent vehicles brought to the business. “It (the Opal) was very rusty and had a huge snake in it, maybe two,” he said. (For the record, the business doesn’t buy snakes and would just as soon not take them.) With scrap prices up, Barr said some people are making a living buying vehicles — or sometimes having them given to them — and scrapping them out, sometimes taking off motors and parts along the way for reuse. Barr said it’s mostly driven by the price of metal, the price of gas and groceries and the need for or want of money. ——— Information from: Kingsport Times-News, http://www.timesnews.net Published in The Messenger 5.28.08

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