More Americans are turning to pawn shops to get by, hawking jewelry, electronics, tools, and other personal items for quick cash, according to a new report by Marketdata Enterprises.
Twenty-five million Americans used pawn shops last year, according to data from the National Pawnbrokers Association cited by WSAV, the NBC affiliate in Savannah, Georgia. There now are 11,000 pawn shops in the U.S.: 59 percent more than in 1988.
And pawn shops are cashing in. The average pawn loan was $100 in 2009, up from $80 in 2008, and as an industry, pawn shops earned $14.5 billion in revenue last year, which is projected to increase 7 percent to $15.6 billion this year, according to the Marketdata Enterprises report. Capitalizing on banks' tighter lending standards and consumers' declining incomes, pawn shops are expanding into middle-class and rich neighborhoods. A pawn shop is even operating in exclusive Beverly Hills, where one-percenters have brought in their Harry Winston diamonds, Cartier jewelry and even a NFL superbowl ring, reports ABC News.
But before flocking to your nearest pawn shop, consider that many pawn shops prey on people that are desperate for money, so it's important that you think through exactly what you need before entering a transaction. Some things to keep in mind:
(1) Beware of pawn shops that pressure you to borrow more than you need, as you could end up both buried in debt and unable to ever get back your personal belongings, according to Fox Business.
(2) Be sure to ask not only about the interest rate you will be charged on your loan, but also about any fees that may be associated with the deal. Fees can really add up, so it's important to know what you're signing up for.
(3) If you need to go to a pawn shop, you should remember to set a minimum price for your personal item and negotiate, according to Money Management International. You also should pay on time, or else the pawn shop may keep your item or charge you excessive fees.