A study released by the FDIC in February 2011 reported as many as 28 million "un-banked" and 44 million "under-banked" Americans. These are people who do not use banks as intermediaries for their transactions. (50 percent of Americans are living paycheck-to-paycheck.)
One intermediary they use is the pawnbroker. Studies show that 32 percent of pawn customers borrow only twice per year to help cover unexpected expenses. The average guy who uses a pawnbroker is 36, has a household income of $29,000, 80% are employed, 82% have a high school diploma or GED, 33% are homeowners, and the average loan they take out is $150.
A medical radiological technician I know, certified and employed, quit his job to open a pawnshop. In the last two years he has expanded his sites to four and just bought a fifth shop (and its building.) He is starting a sixty thousand dollar upgrade of the premises. He is busy in all sites but the downtown area with its foot traffic is best. Most of his sales, however, are on line through EBay or Amazon. He does about five thousand dollars in walk-in sales a day. He could not estimate his on-line sales but his best seller is the calculator. He estimates he sells twenty thousand dollars of calculators a week, almost the total of his walk-in sales. Curiously, chain saws can not be sold on line as they are considered weapons by the government. Steak knives, however, can.The pawnbroker also sells items that have been sold outright to him by customers.
Divestiture--the distribution of goods--voluntary or forced, is always of interest to the economy but, unlike other lenders, the pawnbroker does not report the defaulted loan on the customer's credit report.
One intermediary they use is the pawnbroker. Studies show that 32 percent of pawn customers borrow only twice per year to help cover unexpected expenses. The average guy who uses a pawnbroker is 36, has a household income of $29,000, 80% are employed, 82% have a high school diploma or GED, 33% are homeowners, and the average loan they take out is $150.
A medical radiological technician I know, certified and employed, quit his job to open a pawnshop. In the last two years he has expanded his sites to four and just bought a fifth shop (and its building.) He is starting a sixty thousand dollar upgrade of the premises. He is busy in all sites but the downtown area with its foot traffic is best. Most of his sales, however, are on line through EBay or Amazon. He does about five thousand dollars in walk-in sales a day. He could not estimate his on-line sales but his best seller is the calculator. He estimates he sells twenty thousand dollars of calculators a week, almost the total of his walk-in sales. Curiously, chain saws can not be sold on line as they are considered weapons by the government. Steak knives, however, can.The pawnbroker also sells items that have been sold outright to him by customers.
Divestiture--the distribution of goods--voluntary or forced, is always of interest to the economy but, unlike other lenders, the pawnbroker does not report the defaulted loan on the customer's credit report.
The police monitor the sales of pawnshops closely and the shops all submit a weekly sales slip for appraisal, looking for stolen property but the pawnbroker is careful. He assesses his sellers well.
And he is fair; he knows the seller likely will need to return.
And he is fair; he knows the seller likely will need to return.
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