Tag: History of Pawn

  • History of Hong Kong Pawn

    History of Hong Kong Pawn

    Pawn shops have a long and robust history throughout the world. One of the longest-running pawn civilizations is that of Hong Kong. Dating back to 3,000 years, Buddhist monks began the first ever recorded pawn and trade operation when they began granting loans to peasants while holding common household goods as collateral. The world took note of this brilliant business model and soon western civilizations like Greece and Rome were implementing pawn loans to provide a way for the lower class entrepreneurs to build their small business dreams.

    The History of Hong Kong Pawn

    The History of Hong Kong Pawn

    Unfortunately over the years, the unregulated industry allowed seedy and/or illegal activities to take place undetected, earning the industry a negative reputation in most western civilizations.

    However in Eastern civilizations such as Hong Kong, pawn shops have continued to be pillars of their communities. The positive intentions of the Buddhist monasteries stayed with the business model for generations to come, creating a rich tradition. A government-regulated industry since 1926, there are now more than 250 pawn shops in Hong Kong. The law limits the amount of interest a shop can charge to 3.5% per month and limits the overall loan amount to $100,000 HK.

    Eastern and Western pawn shops have much in common aside from their reputations within their communities. The business model itself is the same on both sides and the intentions of their customers remain the same. Shops in Hong Kong required collateral from their loan customers the same as in the US. And if the loan customer fails to pay back the amount of the loan, they lose their collateral. Customers are often folks who are interested in quick access to cash. Whether to finance an investment or payoff another loan, customers on both sides of the world find the pawn loan process much easier than dealing with the bureaucracy of being approved for other institutional loans.

    What is really interesting is the trend both Eastern and Western pawn industries are currently experiencing of high-net worth pawning. If you read our previous article on Luxury Pawn shops, you know that the number of individuals with large amounts of capital, or the capability of producing large amounts of capital, is rapidly increasing. Turns out that high net-worth individuals across the world are recognizing the exponential benefits of using pawn loans over traditional business loans. The only differentiator between the East and West here is the low loan limit the Hong Kong government sets on their loan amounts.

    So why do such identical industries have such different reputations across the globe? There is speculation that the 19th century boom of pawn brokers across Britain sparked industry competition that granted loans on practically anything (like bed linens). Taking into consideration that the industry was unregulated and there were no paper trails, pawn brokers could (and would) change the loan terms on borrowers at will. Whereas on the Eastern hemisphere, pawn brokers have always been viewed as part of a rich tradition that others in the community adore and value. In fact, when the infant mortality rate in Hong Kong was at a critical level, parents would choose their local pawn broker to serve as godparent to their child because they were viewed as an auspicious person and would bring good fortune to the infant.

    If you are considering pawning one of your belongings or simply visiting us to see what is available for sale, please stop in at 14158A Lambert Rd in Whittier.

  • What TV Doesn’t Tell You about Pawn Shops

    What TV Doesn’t Tell You about Pawn Shops

    In the last ten years, a tide has shifted in the pawn shop industry. Or rather, in the way the pawn shop industry is viewed. In 2009, a reality show called, “Pawn Stars” debuted on the History Channel. It quickly became a fan favorite and is still on the air today despite the flurry of knock-off shows that have tried to compete with the show’s ratings (e.g. Hardcore Money, Hardcore Pawn, Beverly Hills Pawn, etc.).

    Thanks to shows like Pawn Stars, people who have never visited a pawn shop in their life have been given access to the inner workings of a real-life pawn shop in Las Vegas, NV.

    Or have they?

    Most reasonable people assume that what they see on reality TV shows is either scripted or at the very least, well-polished. Do pawn shops really haggle over civil war rifles and Paul Revere’s silver spoon every day? No! In fact, if you were to video the day-in, day-out activities of a pawn shop, it would most likely put you to sleep. Nevertheless, it is fun to watch.

    We thought we would share some insider information on how shows like Pawn Stars make it happen behind the scenes.

    What TV Doesn't Tell You about Pawn Shops

    What TV Doesn’t Tell You about Pawn Shops

    Pawn Sellers Are Pre-Approved

    Producers of the show vet potential sellers and their items before they ever walk into the store. Given that the most common items in pawn shops are used electronics, tools and musical instruments, you should not be surprised to hear that the undeniably rare items that are brought into the Pawn Star shop are pre-arranged beforehand.

    Everyone Gets Coached

    It doesn’t matter how cool or rare an item is; if the seller is awkward on camera, it’s not good TV. That’s why producers coach the sellers on how to act during their interaction with the Pawn Star cast.

    Coaching doesn’t stop there, either. The cast is also “coached” with information about the item they are discussing with a seller. Ever wonder how in the world they know so much about so much? Well, they don’t.

    No Negotiation

    The agreed upon sale price for the pawned item is determined before filming. Hope that doesn’t break your heart, but the logic makes sense. A lot of people want to be on TV.

    If the producers assumed that every seller would be willing to sell their item to the pawn shop for a reasonable price, they would waste a lot of time.

    Pawn Shops Are Not That Busy

    It is true that the Pawn Stars shop has become a tourist attraction in Las Vegas, but all those people in the busy background of the show are not tourists or customers! They may be fans of the show, but they have all been selected to be in the background and have signed waivers to be on film.

    While there is a lot that goes into a show like Pawn Stars that isn’t quite “reality”, we are still thankful for the success it’s had. Not only did it help bring pawn shops into the spotlight of American culture for good reasons, but it also extended a bridge to those people who had never even considered stepping into a store.

  • Is Pawn Broking a Bad Times Industry?

    Is Pawn Broking a Bad Times Industry?

    Due to its portrayal in the movies and TV, some have a negative opinion of the pawn industry overall. However, the idea that pawn brokering is a “bad times” industry is simply untrue. While it may be the case that customers who are currently experiencing a personal hardship may choose to utilize the services of a pawn shop, the pawn industry itself does not thrive during times of widespread economic hardship. In fact, the pawn industry suffers the same as most any business will during times of economic strife, recessions, depressions or whatever you might call it. Pawn shops can and do survive bad economies if they make necessary adjustments to the loans they make as well as the merchandise they choose to buy, but they see higher profits in good economies.

    Are Pawn Shops a Bad Time Industry?

    The credit industry sees gains based on the assumption that the borrowers will be able to fulfill the agreement of the loan terms. However, in poor economic times, unemployment rises and it becomes less likely that borrowers will be able to repay their loans, regardless of what type of loan they have. In the case of a pawn loan, this would mean the borrower would forfeit the merchandise they put up as collateral for the loan.

    Many are disillusioned at the impact this has on pawn shops; since the borrower provides the shop with physical collateral that they forfeit if the loan terms are not met, the shop still makes money, right?

    Not the case.

    During hard economic times, the value of most consumer merchandise decreases. Meaning, if the pawn shop is able to resell the forfeited merchandise, they will sell it at a lower value than what they could if the economy was thriving. In poor economies, it is more difficult to sell merchandise because consumers have far less discretionary income, which means that the forfeited merchandise is likely to sit on the shelves of the shop for a while, rendering the shop little to no profit.

    In short, the pawn industry is not a “bad times” industry that earns profits from society’s desperation. Pawn shops see ups and downs in their business just like most every other type of business; they are most successful when borrowers can repay their loans or sell forfeited merchandise quickly for a profit.

  • The History of Pawn Broking

    The History of Pawn Broking

    The history of pawn broking dates back further in history than you probably think. In fact, the business of pawn broking can be traced back to the Chinese during the 5th century. Over 3,000 years ago, Buddhist monasteries began what we know today as pawn broking, although the business was known to the Chinese as ‘changshengku’ (life-long treasures).

    The industry, of course, has evolved greatly over time. Perhaps the biggest step in the pawn industry’s evolution occurred in Italy during the fifteenth century when the well-known and well-off Medici family was divided into bankers and pawn-brokers. The Medicis used half of the family crest to create the well-recognized symbol for pawn brokers, the famous 3 gold balls.

    Pawnbroker-traditional-symbol
    The widespread availability of pawn brokers hit its peak during the 19th century in Britain, when pawn shops were located on every corner. Loans were offered to borrowers on practically anything including bed linens, cutlery, or furniture. No doubt that the bad reputation of pawn broking was spawned during this time when laws and regulations for pawn shops were non-existent and there were no paper trails to trace back loan terms, ownership, etc. It was not uncommon for stolen merchandise to be sold to pawn shops or even for unscrupulous shop owners to change loan terms on borrowers on a whim.

    Thankfully the reputation of the pawn industry has only improved since these times and especially in the past 30 years. In the United States, pawn shops are heavily regulated by state and local authorities, and violations are strictly enforced. Pawn brokers are now trusted community establishments and considered legitimate businesses.

    Aside from the laws and regulations that have improved the reputation and utilization of pawn loans, as of recently, the industry benefited from the credit boom of the 1980’s when loans and credit cards really took off and became quite common. Customers who may have been denied for these types of financing options due to poor credit were able to find financing at pawn shops by posting items of value as their collateral. In recent years, customers have begun using pawn loans in place of cash advances. With more and more companies paying their employees once or twice a month versus weekly, employees are more likely to experience a cash flow problem. Pawn loans can be the perfect solution for these individuals, offering them short term and low principle loans.

    Pawn brokers have been providing borrowers with an easy way to get cash fast since the 5th century. Given the strides the industry has made, it is safe to say we will likely be seeing pawn brokering for years to come.

    *Image credit: By Traced by User:Stannered (Image:Pawnbroker-traditional-symbol.png) [Public domain], via Wikimedia Commons

  • The Evolution of the Pawn Industry

    The Evolution of the Pawn Industry

    pawn shop historyAll too often, when people think of pawn shops, they think of a stereotype they saw in a movie one time. We all tend to associate businesses we don’t know with what we see in the media. Unfortunately, these portrayals are not always accurate. The pawn industry today is a vibrant business community, with many services to fit a variety of customers – even the wealthy.

    The pawn industry has a rich history and has gone through many changes through time. Though the pawn industry did not always look exactly as it does now, lending money based on collateral has been one of the most important businesses throughout time. People who needed to get cash fast could do so in exchange for an item of value. Still, it wasn’t until 1785 that pawnbrokers were required to have a license (a fun fact for a future trivia night). This served to make the business more reliable for prospective buyers. Since then, the industry has only improved.

    Today there are more than 12,000 pawn shops in the U.S. alone. They operate on much the same model as pawn brokers have since inception. Whenever someone needed access to cash quickly, they could sell an item with the intention to buy it back plus a small amount of interest. If the person is uninterested or unwilling to buy the item back, the pawnbroker then has the right to sell the item to another customer.

    During the Great Depression, pawn brokers were some of the only places families could access cash. While many banks failed, the pawn industry provided people with money they desperately needed. This continues today. Many Americans don’t have access to banks or the time to fill out the lengthy paperwork required for personal loans. The pawn industry fills this need by providing millions of Americans access to cash at reasonable rates and terms.

    Pawn loans are held to high standards and are required to be upfront about the terms and conditions of their loans. The National Pawnbrokers Association, established in 1988, serves to further regulate the industry. In fact, each pawned item is registered and documented to prevent the sale of stolen items. This helps to ensure that characters with less than positive intentions take their business elsewhere. Due to this registry, it’s common that pawnbrokers often know the history of the items in their shops, whether they are antiques, electronics or jewelry. Over the years, the pawn industry has become increasingly mainstream and continues to provide a solid alternative to traditional personal loans.