Author Topic: Rich people and pawn shops  (Read 5026 times)

405programmer

  • 5 O'Clock Shadow
  • *
  • Posts: 86
Rich people and pawn shops
« on: March 05, 2018, 02:18:18 PM »
Just saw this post on CNBC and wanted to share.

https://www.cnbc.com/2018/03/05/the-wealthy-are-using-pawn-shops-to-finance-their-business-ideas.html

Someone should tell them that by SELLING their fancy watches they could use even more money for business or pleasure...

RFAAOATB

  • Pencil Stache
  • ****
  • Posts: 547
Re: Rich people and pawn shops
« Reply #1 on: March 05, 2018, 06:39:50 PM »
So how can I take advantage of this and get upper class luxury goods at upper middle class prices?

Dicey

  • Walrus Stache
  • *******
  • Posts: 9442
  • Age: 61
  • Location: NorCal
Re: Rich people and pawn shops
« Reply #2 on: March 07, 2018, 04:59:24 AM »
So how can I take advantage of this and get upper class luxury goods at upper lower middle class prices?
FTFY

ETA - I've since had a time to read the full article. Do pawn shops have a trade group? I think this is just a maketing piece. Feels like a few pawn brokers got together at a bar during their annual conference and brainstormed ways to make their business look less sleazy, so they can attract high volume items and make more money. And the example of the guy who pawned his collection of [unspecified] so he could buy a car and drive for Uber? We all know how that one's going to end. Rich people my ass.
« Last Edit: March 07, 2018, 10:20:52 AM by Dicey »

Laura33

  • Handlebar Stache
  • *****
  • Posts: 2205
  • Location: Mid-Atlantic
Re: Rich people and pawn shops
« Reply #3 on: March 07, 2018, 08:18:43 AM »
Funny, my first thought was, damn, if you don't have that much in savings, then you can't afford the "thing." 

But now I think this might be brilliant.  Based on the article, it sounds like this is focused on short-term needs; it's not that they don't have the money to pay cash, it's that their money is wrapped up in other investments.  I know there are a lot of people here who believe you should keep as little in cash as possible to maximize overall returns, so this would be consistent with that, just at a much larger scale (I wouldn't be comfortable with that approach, but it's definitely the best way to maximize returns).  So you get this massive, fast loan, with the only collateral being some silly object that doesn't matter anyway -- pretty brilliant.

My only real question is what is the effective interest rate if you decide to redeem the collateral?  Having no experience with pawn shops, I am assuming that you need to pay back more than you borrowed to redeem it, and so you'd need to weigh that into the overall equation. 

And, of course, it's only smart if you are using it to increase your wealth, e.g. using the money to invest in the mentioned business opportunities.  Borrowing money to buy an unnecessary depreciating asset is stupid at any wealth level.

Seradoc

  • 5 O'Clock Shadow
  • *
  • Posts: 44
Re: Rich people and pawn shops
« Reply #4 on: March 07, 2018, 09:01:29 AM »
with the only collateral being some silly object that doesn't matter anyway

Why not just sell the silly object?  Someone else is holding it anyway, so you can't enjoy it.  You could just buy another one later if you miss it so much.

It only makes sense to me if your sentimental family heirlooms happen to be worth significant amounts of money.  Even then, I don't think that I would want to pawn my sentimental heirlooms when I could afford to avoid it.

Gilly

  • Stubble
  • **
  • Posts: 103
Re: Rich people and pawn shops
« Reply #5 on: March 07, 2018, 09:42:19 AM »
with the only collateral being some silly object that doesn't matter anyway

Why not just sell the silly object?  Someone else is holding it anyway, so you can't enjoy it.  You could just buy another one later if you miss it so much.

It only makes sense to me if your sentimental family heirlooms happen to be worth significant amounts of money.  Even then, I don't think that I would want to pawn my sentimental heirlooms when I could afford to avoid it.

I'd imagine it still falls back to time. How quickly can you sell 400k worth of high end watches? Also, maybe it is rare, if sold it would take considerable effort to replace it.

solon

  • Handlebar Stache
  • *****
  • Posts: 1453
  • Age: 1818
  • Location: CO
Re: Rich people and pawn shops
« Reply #6 on: March 07, 2018, 09:49:34 AM »
I feel like a wealthy person who is hawking an item is probably also aware that he could sell the item. For whatever reason, it makes more sense to hawk it than to sell it.

Wealthy people using pawn shops is really not a problem I need to spend much time thinking about!

BTDretire

  • Handlebar Stache
  • *****
  • Posts: 2334
Re: Rich people and pawn shops
« Reply #7 on: March 07, 2018, 11:48:33 AM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
 Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Laura33

  • Handlebar Stache
  • *****
  • Posts: 2205
  • Location: Mid-Atlantic
Re: Rich people and pawn shops
« Reply #8 on: March 07, 2018, 12:14:50 PM »
with the only collateral being some silly object that doesn't matter anyway

Why not just sell the silly object?  Someone else is holding it anyway, so you can't enjoy it.  You could just buy another one later if you miss it so much.

What if you don't actually want to sell it?  "Hmm, I have awesome business opportunity X, but I need the money by Friday, and it will take me two weeks to liquidate that much from my various other investments.  I could sell my Rolex collection, assuming I could find a buyer.  But I like my Rolexes.  OTOH, this guy down the street will give me that money today, if I just let him hold on to my Rolexes for two weeks, and I can get them back in two weeks when I get the money from my other investments."

Sounds like a no-brainer to me.  But like I said, the real question in my mind is the effective interest rate for that deal -- I am assuming that the pawn shop is going to charge some sort of markup (i.e., "I give you $100K for the watches, you pay me back $120K in two weeks if you want to redeem them").  I have no idea how much that charge is, but I am assuming it is relatively usurious, which would make the deal significantly less appealing.

I'm a red panda

  • Walrus Stache
  • *******
  • Posts: 7737
  • Location: United States
Re: Rich people and pawn shops
« Reply #9 on: March 07, 2018, 12:18:09 PM »
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

I know the pawn shops in my college town will only take the class rings if you have a photo ID that matches the name engraved on the ring. So there is at least some effort there to not take stolen objects.

Also- I'm shocked that is legal for them to sell known stolen property

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Rich people and pawn shops
« Reply #10 on: March 07, 2018, 12:28:55 PM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Are you sure?  It's basically blackletter law that someone stealing your property doesn't get title, even if they paid fair value.  The buyer's remedy is to go after the seller, who they voluntarily entered into a transaction.  Thte burden is not put on the victim of the theft.

I would be surprised if Florida passed a law to change that; maybe as a practical matter people have trouble proving ownership of stuff like jewelry. 

TheGrimSqueaker

  • Handlebar Stache
  • *****
  • Posts: 2088
  • Location: A desert wasteland, where none but the weird survive
  • www.theliveinlandlord.com
    • The Live-In Landlord
Re: Rich people and pawn shops
« Reply #11 on: March 07, 2018, 02:08:20 PM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Are you sure?  It's basically blackletter law that someone stealing your property doesn't get title, even if they paid fair value.  The buyer's remedy is to go after the seller, who they voluntarily entered into a transaction.  Thte burden is not put on the victim of the theft.

I would be surprised if Florida passed a law to change that; maybe as a practical matter people have trouble proving ownership of stuff like jewelry.

The young woman may not have been looking for stolen property: she may have been there to redeem the ring.

A pawnbroker either lends a small sum of money with the pawned item as collateral, or purchases the item for slightly more with the intention of re-selling it. The difference between pawning and selling is that you can get more for selling the item, but you can't get it back by repaying the loan. Likewise, if you miss the deadline for the loan repayment, the pawnbroker gets title to the pawned item and has the right to sell it for whatever they can get.

Items that aren't for sale yet are supposed to be stored separately from items that are for sale. That way there can't be any confusion: if Johnny used to work on the dock but pawned his six-string to help pay the bills while his union was on strike, the pawnbroker generally stores the guitar separately from the instruments that are for sale. If there's a mix-up and the pawnbroker sells Johnny's guitar before the payment is due only to have Johnny arrive with the payment in hand, the pawnbroker's in a world of hurt and generally has to compensate the owner for the fair market value of the item.

So, if the young woman was there to reclaim the ring on time with her payment in hand only to find the ring being offered for sale, she had every reason to go ballistic: that ring should not be out on the floor until well after the payment is due.

There's another side to the issue: if she came with the payment or to see the ring but did NOT pay on time and the minimum allowable time had elapsed such that the broker had the right to sell the ring, she may still have been upset to see it being offered for sale. In a lot of ways it's like when someone rents a storage shed but doesn't pay on time: there are escalating penalties that culminate with the owner selling off the contents of the shed. Depending on where it happens, state or provincial law may require the seller to refund surplus money to the original owner of the item if the item sells for more than the value of the pawn loan (or outstanding storage fee).

Frequently when people lose "their" property due to failure to make payments, they get angry. It's the same as when a car is repossessed or when they are evicted for nonpayment of rent. I don't blame you for ducking out rather than having to witness something like that.

Ryo

  • 5 O'Clock Shadow
  • *
  • Posts: 39
  • Location: Japan
Re: Rich people and pawn shops
« Reply #12 on: March 08, 2018, 02:44:30 AM »
if Johnny used to work on the dock but pawned his six-string to help pay the bills while his union was on strike,

Brilliant

one piece at a time

  • Stubble
  • **
  • Posts: 100
Re: Rich people and pawn shops
« Reply #13 on: March 08, 2018, 04:17:58 AM »
I agree Johnny's story is very compelling. Now I'm curious if it was his first real six string.

Smokystache

  • Bristles
  • ***
  • Posts: 319
Re: Rich people and pawn shops
« Reply #14 on: March 08, 2018, 04:39:35 AM »
if Johnny used to work on the dock but pawned his six-string to help pay the bills while his union was on strike,

Brilliant

So many bonus points for this.


One key piece of info here is the rates pawn shops are charging: "Interest rates may vary from 12% to 240% or more" [APR]
(https://www.nolo.com/legal-encyclopedia/disadvantages-pawnshop-loans.html

States with low rates (36% APR is cited as a low rate) can also throw in (sometimes) 20% per month holding fees   - so it might be 23% or more per month. So pretty much getting into pay-day-loan territory.

SnackDog

  • Handlebar Stache
  • *****
  • Posts: 1284
  • Location: Latin America
Re: Rich people and pawn shops
« Reply #15 on: March 08, 2018, 05:19:06 AM »
Pawn shops serve a useful service for people down on their luck who need to convert stuff into cash in a hurry.

Pawn Shop prices strike me as very high although they are obviously negotiable.

I've been banned from shopping at them ever since an incident about 15 years ago when I bought what I thought was a fabulous used Black and Decker circular saw at a pawn shop.  A week later my spouse saw a better one brand new at Home Depot for slightly less than I paid. 

BTDretire

  • Handlebar Stache
  • *****
  • Posts: 2334
Re: Rich people and pawn shops
« Reply #16 on: March 08, 2018, 09:59:43 AM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Are you sure?  It's basically blackletter law that someone stealing your property doesn't get title, even if they paid fair value.  The buyer's remedy is to go after the seller, who they voluntarily entered into a transaction.  Thte burden is not put on the victim of the theft.

I would be surprised if Florida passed a law to change that; maybe as a practical matter people have trouble proving ownership of stuff like jewelry.

 There is a way around it but you basically have to buy your stolen item back.

http://www.mysuncoast.com/news/local/florida-law-permits-pawn-shops-to-request-money-for-stolen/article_745a30ea-0ebd-11e4-8653-0017a43b2370.html

http://www.nbc-2.com/story/29335958/florida-law-allows-pawn-brokers-to-be-paid-for-stolen-items

http://www.sarasotasheriff.org/programs_and_amp_services/crime_prevention/pawn_brokers_act.php

TheGrimSqueaker

  • Handlebar Stache
  • *****
  • Posts: 2088
  • Location: A desert wasteland, where none but the weird survive
  • www.theliveinlandlord.com
    • The Live-In Landlord
Re: Rich people and pawn shops
« Reply #17 on: March 08, 2018, 01:53:46 PM »
I agree Johnny's story is very compelling. Now I'm curious if it was his first real six string.

Yes. He bought it at the five-and-dime and played it until his fingers bled.

TheGrimSqueaker

  • Handlebar Stache
  • *****
  • Posts: 2088
  • Location: A desert wasteland, where none but the weird survive
  • www.theliveinlandlord.com
    • The Live-In Landlord
Re: Rich people and pawn shops
« Reply #18 on: March 08, 2018, 02:26:39 PM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Are you sure?  It's basically blackletter law that someone stealing your property doesn't get title, even if they paid fair value.  The buyer's remedy is to go after the seller, who they voluntarily entered into a transaction.  Thte burden is not put on the victim of the theft.

I would be surprised if Florida passed a law to change that; maybe as a practical matter people have trouble proving ownership of stuff like jewelry.

 There is a way around it but you basically have to buy your stolen item back.

http://www.mysuncoast.com/news/local/florida-law-permits-pawn-shops-to-request-money-for-stolen/article_745a30ea-0ebd-11e4-8653-0017a43b2370.html

http://www.nbc-2.com/story/29335958/florida-law-allows-pawn-brokers-to-be-paid-for-stolen-items

http://www.sarasotasheriff.org/programs_and_amp_services/crime_prevention/pawn_brokers_act.php

In New Mexico we've got a law that specifies a minimum mandatory holding period before a pawnbroker can sell a purchased item. I don't recall the time period exactly (it's not a service I've ever used) but I think it's on the order of ten days. It's to give property owners an opportunity to go to all the pawnshops with pictures of their stolen property and to reclaim it. The shops are also required to get positive identification of everyone coming in with an item to pawn or sell. It's helped with pawnshops no longer being used as extensively to fence stolen items; that activity has moved to eBay, Craig's List, and neighborhood garage sales.

Jrr85

  • Handlebar Stache
  • *****
  • Posts: 1204
Re: Rich people and pawn shops
« Reply #19 on: March 08, 2018, 04:09:20 PM »
My limited experience with pawn shops is this,
I wondered into the pawn shop between my work and home.
I saw a pretty young woman at the counter, and noticed the
pawn agent dump several rings out of an envelope, she looked
them over and yelled where's my mama's ring, it the one
with the blue stone.
 Then she ran over to the counter with all the rings for sale,
 and again started yelling, there it is, that's my mama's ring.
 I didn't stick around to see the end result.
Here in Fl. if your stolen item is in a pawn shop, you get to pay
for it, to get it back.

Are you sure?  It's basically blackletter law that someone stealing your property doesn't get title, even if they paid fair value.  The buyer's remedy is to go after the seller, who they voluntarily entered into a transaction.  Thte burden is not put on the victim of the theft.

I would be surprised if Florida passed a law to change that; maybe as a practical matter people have trouble proving ownership of stuff like jewelry.

 There is a way around it but you basically have to buy your stolen item back.

http://www.mysuncoast.com/news/local/florida-law-permits-pawn-shops-to-request-money-for-stolen/article_745a30ea-0ebd-11e4-8653-0017a43b2370.html

http://www.nbc-2.com/story/29335958/florida-law-allows-pawn-brokers-to-be-paid-for-stolen-items

http://www.sarasotasheriff.org/programs_and_amp_services/crime_prevention/pawn_brokers_act.php

That is odd.  But at least it's "free" in cost if not in opportunity cost to get your property back. Kind of dirty that they basically put up an artificial barrier to getting your property just to encourage you to pay the pawn shop owner.  Pawn shops in florida must have a stronger lobby than anywhere I've lived.

AnnaGrowsAMustache

  • Pencil Stache
  • ****
  • Posts: 760
Re: Rich people and pawn shops
« Reply #20 on: March 09, 2018, 01:48:57 AM »
I hate pawn shops. Nasty, sleazy industry profiting off the misfortune of others. I'll bet the wealthy folk get something approaching a market price for their items, but Johnny would have been lucky to get a few bucks for his six string. Pawn people can smell desperation.

Chuck Ditallin

  • 5 O'Clock Shadow
  • *
  • Posts: 37
Re: Rich people and pawn shops
« Reply #21 on: March 09, 2018, 11:57:23 AM »
I agree Johnny's story is very compelling. Now I'm curious if it was his first real six string.

Yes. He bought it at the five-and-dime and played it until his fingers bled.

It was a long time ago, though not the 49 years that people popularly suppose.

Chuck Ditallin

  • 5 O'Clock Shadow
  • *
  • Posts: 37
Re: Rich people and pawn shops
« Reply #22 on: March 10, 2018, 02:28:53 PM »

marty998

  • Walrus Stache
  • *******
  • Posts: 6034
  • Location: Sydney, Oz
Re: Rich people and pawn shops
« Reply #23 on: March 10, 2018, 02:43:59 PM »
I agree Johnny's story is very compelling. Now I'm curious if it was his first real six string.

Yes. He bought it at the five-and-dime and played it until his fingers bled.

It was a long time ago, though not the 49 years that people popularly suppose.

I feel like I'm missing on something awesome here but I don't know what it is :(

I also don't feel like googling it cause it'll make me feel dumb :(

Johnny was living on a prayer in the summer of 69?

solon

  • Handlebar Stache
  • *****
  • Posts: 1453
  • Age: 1818
  • Location: CO
Re: Rich people and pawn shops
« Reply #24 on: March 10, 2018, 07:38:55 PM »
And who is Johnny? Tommy's brother?

TheGrimSqueaker

  • Handlebar Stache
  • *****
  • Posts: 2088
  • Location: A desert wasteland, where none but the weird survive
  • www.theliveinlandlord.com
    • The Live-In Landlord
Re: Rich people and pawn shops
« Reply #25 on: March 10, 2018, 09:18:18 PM »
And who is Johnny? Tommy's brother?

Yes! With the final reference (Who Is Johnny) all the 1980's easter egg song references have been identified.