Image: Pawnshop in Connecticut
Spencer Platt  /  Getty Images file
Pawnshops like this one in Bristol, Conn., are doing a brisk business these days as increasingly affluent customers seek cash for their jewels, tools and other belongings.
By Eve Tahmincioglu
msnbc.com contributor
updated 3/19/2009 12:49:53 PM ET 2009-03-19T16:49:53

It's not your father's pawnshop anymore.

The idea of the local pawnbroker running a seedy business where people from the other side of the tracks go for fast money is falling by the wayside. The nation's economic struggles are sending a whole new crop of clientele to pawnshops across the country.

Cash-strapped consumers, many of whom have lost their jobs, are turning to pawnbrokers for help, according to pawnshop operators around the country.

"There are a lot of first-timers, a lot of people that might not have been in a pawnshop before because we are the last resort," said Dave Adelman, president of the National Pawn Brokers Association and owner of Jerry's pawnshops in Atlanta.

The business of pawnbroking is not new. With roots that can be traced to ancient China, the business basically provides borrowers with money in exchange for items left at the pawnshop as collateral.

If the owner pays back the loan plus interest within a certain period of time, typically 30 days, he can get the item back. Otherwise the pawnshop is free to sell it.

The average pawnshop customer has an income of $29,000 and is 39 years old, according to the National Pawnbrokers Association. But in recent months, as the economy has weakened, pawnshop owners report seeing more affluent and older consumers in their stores.

These new patrons are upping the ante on the types of goods pawnshop operators are seeing come through their doors, such as Rolex watches and Wii video players.

"The fact that our customer base has expanded more recently because of the economic situation [means] we might be seeing better-quality goods than what we might normally see," Adelman said.

A look at some of the most popular items in the nation's pawnshops offers a glimpse at how the recession is affecting people in different industries and income brackets.

Gold rush
Jewelry has always been a mainstay for pawnshops, but gold appears to be the most common item coming into pawn stores lately. Gold is seen as a safe haven for investors during tough economic times, and this recession has been no exception. The price for gold has been hovering at about $900 per ounce.

That means pawnshop display cases are stuffed with gold necklaces, bracelets, and even Rolex watches, according to Joe Cacciatore, owner of Tampa, Fla.-based Capital Pawn & Financial Services. He has even had football players bring in Super Bowl rings and NFL rings for pawn. (He wouldn't tell us their names.)

At Uncle Sam's Pawn Shop in Columbus, Ohio, gold jewelry and diamonds are among the top items coming in and going out, said Alan Bretz, the store's manager.

"Now we're seeing people from higher socioeconomic backgrounds, and they're bringing in larger diamonds [and] the stuff right off their wrists," he explained.

So long, flat panel
A flood of big-ticket electronics is flowing into pawnshops — especially those big, thin televisions — a signal that many consumers have bitten off more spending than they can chew lately.

Video: Pawnshop basics for first-timers After years of selling like hotcakes, flat-panel televisions have become decidedly unappetizing to consumers. Sales fell in the fourth quarter of 2008 for the first time ever, according to market research firm DisplaySearch.

And while it's a loss to traditional retail outlets, the decline in flat-panel television sales is a gain for pawnshops.

They are among the big sellers and most-pawned items at many pawnshops, but store owners like Phyllis Dansky of Art's Money Loan Inc. say they're only accepting televisions manufactured in the last two years so that they can handle digital programming.

Drill baby, drill
American consumers may be getting a bit handier in the current downturn.

Sales of power tools, especially power drills, are up during this recession, pawnshop owners say, and they believe it's because more customers are being forced to do their own home repairs because they're strapped for cash.

Jack McCrory, owner of the Ace Pawn Shops chain in Indiana, says he's seeing more contractors hurting for money come into his stores and pawning their tools — typically on a short-term basis — until they can get back on their feet.

Since most of the tools are used, prices are typically 50 percent below what you'd find at Lowe's or Home Depot, said McCrory. Power tools can go anywhere from $3 to $300, he said.

Singing for your supper?
Musical instruments are hot items at pawnshops right now, and guitars and amplifiers are among the big ones, according to Alan Bretz, manager of Uncle Sam's Pawn Shop in Columbus.A new, full-size acoustic Fender guitar from Best Buy can cost you at least $200, according to the store's Web site, but Uncle Sam's sells them from $150. Half-size guitars for grade school students go for about $50.

Bretz speculates that the increased interest in musical instruments may be consumers looking for low-cost ways to entertain themselves.

"It's about simpler times," he said. "You stay at home, playing your guitar."

Guns for hire
Some pawnshop owners have seen a spike in sales of firearms.

"We can't keep guns in stock," said Jack McCrory, owner of Indiana's Ace Pawn Shop chain. He typically has about 100 guns for sale at any one time but now has only about 15 on the shelf because of high demand, he said.

McCrory noticed an uptick in sales after President Barack Obama took office and speculates that his customers are worried that a Democratic-controlled Congress will tighten gun control regulations.

"The concern about regulations is about what types of guns [people] can buy, and whether they'll be in a database when they buy that gun," he said.

Top sellers at Ace are pump shotguns that range from $175 to $350.

Wii the broke people
Just a year ago it seemed like almost every American was getting fit using a Wii. More than 18 million of the video game consoles have been sold in the United States since 2006, according the market research firm NPD Group.

Now, alas, it looks like we may have to look elsewhere for our fitness fix.

More and more consumers are trading in their Wii systems and other video game consoles, including the Xbox, at pawnshops nationwide.

Joe Cacciatore, the owner of Capital Pawn & Financial Services in Tampa, said he's seeing lots more game consoles come in as the economy has worsened.

"These are things [people] get for Christmas," he said, adding that in these troubled times a parent's need to find cash to feed a child is trumping that child's desire to be entertained.

Additional reporting by Katherine Guiney.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 4.32%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.36%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 11.04%
11.04%
Cash Back Cards 16.44%
16.44%
Rewards Cards 16.04%
16.04%
Source: Bankrate.com