General (6)

Do pawn customers enjoy the same protections under federal law that customers of other financial institutions enjoy?

No. Pawn transactions are the only type of consumer credit that requires reporting to local law enforcement agencies. In many states this reporting is required daily, and must include extremely sensitive personal information about the consumer (i.e. ethnicity, gender, address). Much of this information qualifies as “non-public personal information” under federal privacy law and is entitled to protection as such.

Why would someone go to a pawnbroker to get a pawn loan?

Pawnbrokers offer the consumer a quick, convenient and confidential way to borrow money. A short-term cash need can be met with no credit check or legal consequences if the loan is not repaid. Pawnbroking imposes discipline on the borrower that other lenders may not. Pawn loans do not cause people to over extend credit or go into bankruptcy.

Are pawn rates excessive?

No. To provide their service, Pawnbrokers, like all lenders, must charge rates commensurate with the size of the loan, collateral, risk and recourse. Pawn loans involve substantial operational expenses in terms of appraisal of collateral values, storage, insurance and security infrastructure. Pawn loans are small-dollar, short term loans with no hidden charges.

Do most pawn customers lose their merchandise?

On average, about 80 percent of all pawn loans are repaid. Repeat customers make up a majority of the business, similar to any other lending or retail establishment. Pawnbrokers establish relationships with their customers because they often borrow against the same items repeatedly. Pawnbrokers offer nonrecourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan.

How can I be sure the merchandise I purchase at a pawn store is not stolen?

Less than half of one percent of all pawned merchandise is identified as stolen goods. That is because customers must provide positive identification and a complete description of the merchandise. This information is then regularly transmitted to law enforcement, which dramatically decreases the likelihood that a thief would bring stolen merchandise to a pawn store.

Does the general public have a correct or even fair image of a pawn store?

No. Today’s pawn store looks very different from the stereotypical portrayal seen in film and television. Pawnbrokers have been, and continue upgrading the interior and exterior of stores, as well as employee presentation, customer service, exterior signage, and their marketing and merchandising methods. Pawnbrokers focus on providing exceptional customer service and are active in the community, both politically and within local charities.

This information was obtained from the NPA Industry Overview from July 7th, 2009.

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