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Shops such as C & C Pawn, 412 Washington St., carry a wide variety of items from bikes and TV's to snowboards and watches.

The power of the pawn

Shops ease economic stress

By: Natalie Saeger

Posted: 10/13/08

Gas is priced at more than $3 per gallon and food prices are increasing. Money has become more important than ever before and something every college student could use more of. But when in a bind, where can one turn?

The answer: a pawnshop.

Pawnshops offer individuals quick loans, but also allow people to sell unneeded items as well as a place to shop while on a budget.

Bruce Peterson, Manager at National Pawn Co., 1311 S. Hastings Way, said a pawn is a secured loan. An individual brings in an item and the pawnbroker provides that person with cash, while holding onto their item as collateral.

To be eligible for pawning, Peterson said an individual has to be at least 18 years or older and have the make, model and serial number of the item being pawned.

Reasons for pawning vary among customers. Senior Nick Wellenstein said he thought people pawned because people have to pay off debts right away and can't get a loan from a bank.

"Everyone has their bad times and everyone needs help," Peterson said. "That's kind of what we're here for."

Many individuals who use pawnshops use the extra cash for gas money and rent money.

Keith Dillinger, manager at C & C Pawnbrokers LLC, 412 Washington St., said people overextend themselves, adding that summer is a big time for pawning because of events going on like Country Fest and Rock Fest.

One of the biggest driving forces of the pawnshop industry are utilities.

Dillinger said between Nov. 15 and April 15 the company can't shut their customer's energy off, which leads many people to not pay their energy bills. So when April 15 rolls around those individuals are in need of money.

Getting money upfront when it's in need is one of the biggest benefits of pawnshops.

"You don't have to go through all of the red tape that you would for a bank if you needed a loan," Dillinger said.

For smaller loans, which banks don't provide, pawning can be a cheap and efficient route. With a $25 loan, the interest will be $5.

Also, if banks aren't willing to approve higher priced loans for whatever the reason, a pawnshop will be able to the provide money.

Peterson said if people need money to cover checks that they have out, they can come to a pawnshop to get a couple hundred dollars to cover them. The interest fees will be a lot less than what a return check fee from a bank would be, as well as the fees from a bounced check.

The interest rates for pawning are set at 20 percent for every 30 day period. For example, if a loan pawned on an item was agreed upon for a $25, the 20 percent interest for 30 days would make the item $30 to pick up.

The higher the loan the more the interest, Dillinger said. So, according to the 20 percent rate, a $1,000 loan would have a $200 interest rate per month.

Though the loan interest rates are high, they can prorate, Dillinger said, which means the amount of money refunded is proportional to the amount of time that passed from a specified date. If the loan and item pawned at $1,000 is picked up a week after pawning the total loan will cost around $1,050.

The best bet for anyone looking to pawn is to do things in a quick fashion, Dillinger said, but for the times when someone might have acted too quickly, there are ways to get a sold or pawned item back.

Peterson said at his store if someone sells something and they want it back, by law, a pawnshop has to hold the item for 30 days. The item won't get marked within the 30 day period, but it will have the finance charge of 20 percent added.

The majority of the decisions pawnshops make involving sales have been laid out by government regulations.

"The national average for pawnshops (of having stolen goods) is less than one-tenth of a percent, which is one item in a thousand," Dillinger said, adding that the regulations pawnshops have to follow mostly come from the city.

According to the Eau Claire Code of Ordinances, under the business licenses and regulations chapter, a pawnbroker has to require a customer to present either a current valid Wisconsin driver's license, identification card or photo identification card or a photo driver's license issued by another state or province of Canada.

The pawnbrokers also, according to the city's business licenses and regulations, must submit daily reports to the police concerning every reportable transaction made.

Pawnshop items can range from a variety of different things. Peterson said some of the most popular items at his store are CDs, DVDs, jewelry, guns and guitars.

The prices of the items at pawnshops, Peterson said, are priced around 50 percent less of what they would be in retail stores, which might make buying an unexpected item like a 52-inch plasma TV not such a bad option.

Senior Eric Weber said some pawn shops are quality establishments and would consider buying some of the items offered at the pawnshops like iPods, CDs, DVDs, TVs and stereos.

"College budgets forces one into searching for the best deal," Weber said. "It's the same thing as used cars; depreciation of their values doesn't mean they won't work."

Dillinger and Peterson have noticed that college students aren't frequent customers, and agree many misconceptions generated by the entertainment industry have made pawnshops appear to be dingy, messy places.

Peterson said they try to treat people as if they were on the other side of the counter and offer a neat and organized environment to do so in.

If ever in need of money or looking for a deal, try a pawnshop. Weber suggests looking around because there will be a place that will offer quality.