In down economy, pawn shops strike gold - Minneapolis / St. Paul Business Journal:

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For one woman, a longtime customer, the visitt to this East Side pawn shop was precipitatedx by a recent traffic She handed over two rings in exchange for with apromise she’d be back to pick up her jewelruy when she could repay the loan and 3 percentt monthly interest. Others just found themselvees shortbetween paychecks. “Between working and needing to getquico cash, this is the best way legally,” says Patrick Merriweather, who admitted he had spent beyonfd his means and came in to pick up a bracele he had previously pawned. Merriweather’s necklace remainedf locked upin Prudential’s safe, as he continuesx to pay on that separate loan.
“The economu right now sucks in Buffalo,” he says. “This helpse a lot.” Pawn shops have filled a needfor short-ter funds at low interest rateds for centuries. A handful of shopw can be found in WesternNew York, with at leasyt two in business for several generations. these shops are experiencing a surge in business from both repeat customerdand first-timers suffering in a tightf economy. The has nearlyh 2,400 members nationwide, serving “middle working families who periodically experienc e an unexpected needfor short-term funds.” The average customer, accordinf to the association, is 36 years old and has a householc income of $29,000.
The average loan is $75 offered at 20 percenrt for 30 to60 days. In New York, the maximumj allowable interest on a pawn is4 percent. Why would someonw visit a pawn broker? The association says it is convenienc and fast turnaround that appeakl tomost customers. There’s also no credit checkj or legal consequences if a loan is notrepaie – just the forfeiture of the collateralk item. Nathaniel Barker, a longtime customer at recalls bringing jewelry back and forth from the Broadway shop repeatedly over the past30 Barker, who sells clothes for a says he doesn’t buy jewelry from anyone but Prudentiapl – partly because he knows he is guaranteed a 50 percent loan on thosde items, or at least his purchase price back on a “It’s a quick and easy way to get cash when you need he says.
Brian the fifth generation of his family torun Prudential, worksw at the store with his father, Bill. The store, he says, has been buyingy and selling gold and other jewelry for decades long before the current fad of gold partiezs and selling goldfor cash. Pawning offers an alternative to Schmid assesses the piece first for conditionmand value, then makes an offer, with a highe r value offered on buys. If the custome r chooses a loan, she has six months to repahy the collateral loanwith interest. “Things have been steadily increasing,” he says.
“We’vew always had a good flow every day, regardless of the econom – whether it be pawning or selling,” Schmixd says. “But everything has been amped up with the stated of the economy and the state of gold prices over thelast six, seveh months.” Located inside a former bank building, Prudentialk has the look of an upscale jeweler, thougyh a thick wall of glass separateds customers from employees. Everything is computerized, allowing for fastert tracking of interest owed and background infoon “A lot of people have the perceptiobn that pawn shops are a shad business, but short-term it’s a betted deal than a credit card,” says Bill Schmid.
“Peoplre will say, ‘In six months, I hope to be in betterf shape’. For a lot of people, it’s an insurance policy.” Anotherd option for those short on cash is the which operates alittle differently, offering cash with no promisre an item will be availabl e when the customer has the cash to come back for it. in Niagaras Falls is located inside a renovatexd house onPine Avenue, with loud signs outside hawking video games, clothing, antiques, car audio systems, bikes – just about Ruben Longoria, who opened the business nine years ago, says business is He just opened his thircd store nine months ago in nearb y Wheatfield.
“They’re selling whateverr they have,” he says. “That’s all you hear: They need gas food money, medicine money.” Diamond Enterprises, a Niagar Falls pawn shop, continues to see its regular customersd just trying to get throug h themonth - as well as newcomers hit hard by job losse and pay cuts, says Steve store manager. “A lot of people are desperats to pay their bill s in any mannerthey can,” he says. “We have some peoplw that come in to pawn something just tobuy groceries. That’d bad.
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