NEW YORK (MainStreet) — Forget scouring thrift stores or garage sales. The real place to score some seriously awesome secondhand goods is your local pawn shop.
“There are a variety of items you can find good deals on at pawn shops,” says Reyne Haines, an antiques/vintage expert who has been featured on PBS’ Antiques Road Show. She explains that many pawn shops sell deeply discounted electronics, fine jewelry, musical instruments and an array of collectibles or antiques that can net high prices in their respective niche markets.
This diverse inventory has to do with a pawn shop’s business model.
“Most pawn brokers are retailers by default,” says Stephen Krupnik, a former pawnbroker and current industry consultant who wrote the book Pawnonomics. Instead, shop owners make a majority of their profits off of the loans they hand on items used as collateral. These pawns are held for a short period of time -- typically between 30 to 90 days, depending on state laws -- with interest, which also varies by establishment.
Krupnik says the hope is that the pawn’s owner will either make good on or extend their loan and, while pawnbrokers also purchase items outright, a majority of what winds up on their store’s floor is merchandise that was ultimately defaulted on.
These products are typically priced at a steal.
“We discount it at a low price because we want to move the merchandise,” says Seth Gold, co-owner of Detroit's American Jewelry and Loan pawn shop.
Les Gold, the other owner of the American Jewelry and Loan pawn shop who co-stars with son Seth on truTV series Hardcore Pawn, says they hand out around 500 loans for every five items they buy outright. As a point of reference, their loans initially carry a 90-day redemption window with a 3% per month interest rate. There is also a $1 charge for storage.
“If we can make 10%, we’re happy,” adds Les, as the aim is to quickly bring in revenue to make more loans.