Semi-good advice about pawning

pawnFor such a simple idea that people have been using for thousands of years, pawning seems baffling to many people.

Just the other day here at Kamaaina Loan, we were discussing possible regulatory changes — perhaps coming from the national government — that would affect us, so we pulled down “Black’s Law Dictionary” to refresh everybody about the legal description of “pawn loans.”

It uses words like “bailments” and is not that user-friendly, so this is how I — as a professional writer — boiled it down:

A pawn transaction is a short-term cash loan secured by portable collateral.

The devil, of course, is in the details. We found an article in the Dayton Daily News headlined

Before you hock an item to a pawn shop

It seems to be a Better Business Bureau canned article but none the worse for that. With one exception, we found the advice offered to customers pretty good.

The exception?

• Know the value of items. If you don’t know the value, shop around and/or consider getting an appraisal.

The first part of that is OK. But an “appraisal” is impractical in most cases.

The BBB quotes the National Pawnbrokers Association that the average pawn loan is around $150, and that is close to the average at Kamaaina Loan And Cash For Gold.

Now we also offer appraisals, and ours have been accepted by every court in the state. The difficulty is that the minimum charge for a real appraisal is about $150 — and it can be a lot more for a big task like helping a conservator prepare a report for probating an estate.

Obviously, it doesn’t make sense to pay $150 to learn the value of something you are going to use to get a loan for $150.

So, what to do?

With gold and silver, you can look up the New York price on kitco.com. Then with some simple arithmetic you can determine how much gold is in your wedding band. Example: an 18 karat band is 75% gold, so if it weighs 4 grams it has 3 grams of gold in it.

jeweler signYou know the New York price per gram. The pawnbroker is going to offer you a fraction of that, because if he has to sell the ring there are lots of expenses involved: store overhead, insurance, shipping, assay etc.

That includes his risk that the N.Y. price will go down between the time he gives you cash and the time — at least two months later under the laws we operate under — that he sells it.

So there is room for borrower and lender to make assumptions. Different pawnbrokers will come to different conclusion about what that ring is worth. At Kamaaina Loan, we like to say, see us last. You’ll find out we make the highest offer.

(As a practical matter, the pawnshops on our island are separated by about $5 worth of gas and 30 to 45 minutes of driving time, so you cannot really afford to shop around too much for a $150 loan. Pick a pawnbroker you like and stick with him. Pick us.)

With other items,. the customer can do the same thing we do: look it up on the Internet.There are specialized sites. For example, for golf clubs, the Professional Golfers Association maintains a free site, valueguide.pga.com. This is supposed to be based on transactions across the country, but it may not be entirely reliable for local preferences, and condition counts.

There are sites for particular brands of guitars etc., but for the majority of goods eBay sets the floor. You the borrower can look up prices on eBay as well as we can. Remember to look at “completed auctions” to get the actual prices achieved.

One thing we liked about that BBB article was its report about inquiries and complaints. In 2015, the BBB received over 65,000 inquiries about pawnbrokers, but only 300 were complaints.

We bet they got more complaints about the cheese in cheeseburgers.

(Kamaaina Loan is a member of the Hawaii BBB.)

#maui #mauipawn #mauiretail

The war on pawn (and used cars)

OK, we get

Endangerd in Warren, Michigan (photo from Macomb Daily)

Endangered in Warren, Michigan (photo from Macomb Daily)

it. Pawnshops are not among the best-loved of businesses — except by our customers, who value us.

But just because you disapprove of or dislike somebody’s business, that doesn’t mean you can use local government to make ridiculous impositions. This news has not penetrated to some of the more backward parts of the country, like Macomb County, Michigan.

In Warren in Macomb, county officials are refusing to accept applications for pawnshops and have imposed unconstitutional restrictions, like a 750-foot exclusion zone around churches. And some of them want to extend that to 1,000 feet.

This kind of zoning restriction runs into a well-known (in the civilized world, anyway) constitutional principle, the “rational nexus” requirement.

Governments need a real reason for imposing rules on otherwise legal businesses. It’s OK to ban a business running a trip hammer or a car crusher from operating near a school or a church, both of which need a degree of peace and quiet.

But a pawnshop isn’t going to interfere with a church. (Vice versa might not be the case.) If the church can operate within a thousand feet of, say, a beauty parlor, it will have to put up with pawnshops, too.

(Also, used car lots. Macomb wants to impose similar restrictions on them.)

Beauty parlors, pawnshops and used car lots have similar impacts on their surroundings.

If any pawnbrokers or car dealers in Macomb care to sue, they’ll win. The car lot regulation is particularly easy to see. There cannot be any real difference in impact between a used car dealer and a new car dealer, but Macomb is not trying to clamp down on new car dealers.

There’s a good chance none will sue. It costs money to fight city hall even when you’re sure you’ll win. That’s especially true in a hick county like Macomb, which elects its municipal judges.

There’s a good chance an elected local judge would rule against the pawnshop. Eventually, in a higher court, the shop would win. But it’s a fight not everyone would choose to pick.

However, it costs us nothing to jeer at the clodhoppers in Macomb.

#pawn #maui pawn #maui retail #ProudofPawn

We are on the fringe and proud of it

Customers line up at a Philippines pawnshop (photo by winwin1684)

Customers line up at a Philippines pawnshop (photo by winwin1684)

Pawnbrokers are sometimes called “fringe bankers.” Well, we are called worse things. The people who call us “fringe” bankers are generally more or less sympathetic to what pawnbrokers do, in at least one of our many roles, which is to provide credit to people who are ineligible or unwilling to participate in “mainstream” banking.

At Kamaaina Loan And Cash For Gold, our average loan is about the same as for pawnshops nationwide — $150 or so. Try going to your local bank and asking for a loan that size. Unless you are a potential credit card customer/victim, you’ll be laughed out of the marble halls, in the politest way, of course.

But what about people who are afraid to go into a bank, even if they are in the economic class that bankers like to see? (In the United States, half of the typical bank’s customers generate 150% of profits, which means that the other half cost the bank money. That’s why banks are unwelcoming to little people.)

We almost have to look overseas to understand why some Americans are so wary of banks. Since the New Deal brought in effective deposit insurance for ordinary depositors, few working people have lost savings in a bank failure. (It is not well known, but before the New Deal, there were deposit savings insurance plans in some states, like Nebraska, but as banks failed by the thousands during “Coolidge prosperity,” small savers were wiped out anyway, because the insurance plans did not have sufficient backing.)

Here on Maui, we look to the Philippines, because so many of our residents trace their origin there. Filipino-Americans are an even larger proportion of our customer base than their status in the island (which is around one-third of all residents), This is commonly attributed to their suspicion of banks and bankers, which is something they brought with them, like a fondness for bibingka.

The Panay Times puts it this way:

 

Distrust in the banking system is probably the biggest reason why even the moneyed are cautious about keeping their eggs in one basket. It is no longer possible to count in one’s fingers the local banks that have folded up, leaving their depositors at the delayed mercy of the Philippine Deposit Insurance Corporation (PDIC), which could only refund no more than P400,000.  If a depositor has more than that, sorry na lang.

(400,000 Philippine pesos is only about $8,000, compared with the $250,000 that the FDIC insures US accounts for.)

Even today, that newspaper reports, only one in 10 Filipinos have bank savings accounts. (We suspect the rate is quite a bit higher among Maui Filipino-Americans, but the residual suspicion of banks remains high. Probably it is reinforced by news from relatives back in the islands.)

Suspicion of banks may be good for us pawnbrokers, but when it spreads too far, it begins to hurt the overall economy, because banks cannot fulfill their function of providing business credit. In America, some pawnshops (ours included) make business loans, but it is not a big fraction of our volume.

In the Philippines, and in Southeast and South Asia generally, pawnshops are much more popular as a source of business capital. That is why some big financial operators are looking at funding online pawnshops directed at business startups in the region.

(Softbank, the main backer of this particular venture, is a gigantic Japanese firm that has been expanding from telecommunications into finance.)

One investor puts it this way:

“The online pawnshop is exactly the kind of innovation I believe can help unbanked citizens. The Philippines is the ideal market to start the service, as pawning is the major financing method instead of banking for its people,” Yasu Seo said.

The Philstar.com report on this venture did not reveal how much money is flowing into pawnbrokers targeting startup businesses, but other reports suggest the total is in the tens of millions or low hundreds of millions of dollars. That is not insignificant but indicates the target borrower is an entrepreneur looking to start a small business, not large projects (which probably can tap international funds in places like Hong Kong or Singapore).

How did the Philippines come to distrust banks so? Under Spanish administration, there was no banking to speak of. When the United States gained control in the early 19th century, banks began to be opened in Manila, but communications were not adequate to foster banking in the remoter islands.

Also, most Filipinos in those days were on the edge of subsistence, so they had little money to put into savings accounts.

The disruption of the Japanese occupation was not helpful, as the islands switched currencies. After independence, banks have had only about 70 years to instill confidence in depositors, and they missed the opportunity by having too many failures and (according to Panay Times) too much chicanery.

The Philippines remain a poor country, with many millions of subsistence farmers who cannot aspire to a savings account, but estimates are that at least twice as many people could open accounts as actually do.

That helps make pawnshops important in the islands.

In America, banks do not have such bad reputations (at least for stiffing depositors) but it is still true that something like a quarter of Americans have little or no connection with a regular commercial bank — either because they don’t have enough income to bother or because (especially in some immigrant communities) they are suspicious of them.

That’s where we “fringe financial institutions” come in. Pawnshops provide a needed source of credit to people who are otherwise not welcome in lending offices. We are proud of being able to help.

 

 

 

 

Better endowed

Two women came into a Jacksonville, Florida, pawn shop. One was well-endowed when she came in, but she was even better endowed when she left, because — as surveillance tape shows — while her friend was keeping the salesman occupied, she slipped 5 gold chains and gold pendant into her brassiere.

The shop owner described her as “a professional.”

Well, maybe. But it is a longstanding rule in the jewelry business — one item at a time on the counter. That pawnbroker was asking to get ripped off, and he did. Total loss: $3,600.

 

#maui #mauiretail #mauigold

Another thing to worry about

From Florida comes a report of another way for pawnbrokers to lose money. In this case, $30,000 to a crooked employee who forged pawn tickets, put his own thumbprint on them, then pocketed the amount supposedly given to the customer.

This shop was using paper forms, so it might have been harder to carry it on with an electronic pawn system. On the other hand, the story does not say either how the employee was caught or why it took 9 months to catch him.

You would think that somebody would have noticed that the loans were not being repaid and then discovered that the pawned items weren’t in the store. Unless the crook was doing a lot of extensions.

We note that 52 pawns for $30,000 equals about $600 a “transaction,” another reason you’d think whoever reviewed the summaries should have noticed.

#mauiretail #mauigold #maui

Pawning for a revolution

From Russia Today, a somewhat hard to follow but very detailed look back a hundred years to the days when you could pawn your way into an earth-changing revolution.

The occasion is the hundredth anniversary of the failed Irish rebellion against England. Russian revolutionaries at the time regretted that the Irish were “premature” but also took the outbreak as a portent of a soon-to-begin world-circling wave of revolutions.

 

Trotsky and Lenin proved to be poor prophets in this case — there wasn’t a world wave of successful revolutions but the some of the Irish did gain their independence. However, this ais ablog about pawns, so we are more interested in the pawn transaction.

The Bolsheviks had taken over the Romanov jewelry and were broke but they had a hard time converting it into dollars. Plenty of people would have taken the jewels but the paper money of many countries was suspect around 1918.

The Irish rebels — not yet free — had raised $5 million in cash in the United States so they were in a position to lend on security — a pawn transaction, crown jewels for $20,000 cash.

It was hardly enough to sustain a revolution but it helped. The story gets somewhat bizarre. The pawn was informal and since the rebels didn’t have a treasury to place the jewels in, one of them gave them to his mum, who kept them under her dresss — described as the safest place in Ireland at that time.

Eventually, in 1948, the jewels were sent back to the USSR and the Irish government got its principal back, without interest. There had been inflation in the interim, but the government of Eire got something that was probably worth forgoing interest — at a time when no other country would do so, the USSR treated Eire as a sovereign state.

Nowadays it couldn’t happen. At least not the same way. There are laws against raising money for “terrorists” and crown jewels are rarer than they used to be. Today’s revolutions are financed with diamonds, but just raw ones, or oil; it is unlikely that you can pawn your way to power any more.

 

Purveying art

art2

Besides the tools, surfboards, guitars and fishing poles that we usually comment on, Kamaaina Loan is — quietly — the biggest dealer in fine art in Wailuku. Just because we don’t have “gallery” in our name doesn’t mean we are not a gallery.

Over the years, we have handled original Rembrandt etchings, Salvador Dali etc. But most of our paintings, prints, giclees, sculptures and drawings are by local and Hawaii painters and sculptors like the Diana Hansen Young painting of a Hawaiian beauty pictured here.

It may seem a bit incongruous to have fine art next to vintage comic books but that’s part of the fun of being in the pawn business.

#mauiretail #mauipawn #mauiart #mauipainters

You can find anything in a pawn shop

We say that all the time, and we mean it. For example, news reports say that a San Francisco pawn shop, A to Z, is selling (on eBay) what appears to be an unreleased — even unannounced — new version of the latest Google Glass gadget.

 

No, sorry to say, Kamaaina Loan doesn’t have one. Yet.

UPDATE. March 23

To the surprise of no one, Google has retrieved its wayward Google Glass gadget.

 

Now the only question is, did somebody who had it legitimately sell (or pawn) it, or was it stolen and then sold (or pawned)? .The first alternative sounds improbable, but stranger things have happened.

Our guess: It was stolen from a backpack or a car or something by a crook who did not realize what it was. If someone knew what it was and wanted to make some illegal cash, it would have been possible to get a lot more than $20,000 (the highest eBay bid) from a Google competitor.

Of course, if the crook approached the competitor and the competitor was honest, then that would have turned out badly.

It isn’t true that crime doesn’t pay but it is true that it usually doesn’t pay very well.

 

 

Imaginary pawn shop

This is a new one on us — an imaginary pawn shop where you can look through the windows but not go in and touch the merchandise. Comments are enthusiastic but we think browsing through a real pawn shop is more fun.

Look but don't touch

Look but don’t touch

OK, it’s a Disney thing. Walt was always yammering on about imagination.

We prefer the reality of Kamaaina Loan And Cash For Gold.

More oil for your gold

We are Kamaaina Loan and Cash For GOLD, so we are always fascinated by what gold does. Not that we have any control over it. We buy gold by the tenth of a gram; the big players trade a minimum 1,000 pounds at a time.

So we were as surprised as anyone when gold staged a rally this past week. Here’s what Bloomberg News reported:

 

Bullion jumped 4.1 percent last week for the best performance since August amid a global equity rout spurred by a stock market slump and a weakening currency in China.

Bloomber also reported that gold compared with oil is worth twice what it has been for the past generation — and that was before oil took another tumble yesterday:

 

An ounce of gold buys more than 33 barrels of oil, the most since 1988. The average ratio has been 16.

It sounds like an excellent time to bring your broken or unused jewelry, any gold coins you find behind the cushions in your sofa or any other unneeded gold you have to Kamaaina Loan and Cash for GOLD.

 

#mauigold #mauiretail