I consulted for a nasdaq listed pawnshop. So you can ask me anything.

Pawnshops unlike the tv shop pawn stars, dont make most of their money from buy-sell but rather loans. 80-90% income is from providing secured loans at a very high interest rate. It is high because the labour and insurance associated with storing an item is high. In asia and mexico, the pawn market is immature, typically focused on jewellery only. High value. Lower cost to handle. These loans are effectively to serve the unbanked and underbanked.

In US, you can pawn nearly anything with value. Top items are TVs, game consoles, handyman tools, ladies bags, air jordans...have even seen children's violin and prosthetic limbs, car rims and tyres, firearms...literally anything with value you can pawn. They typically give you 50% of current market value of item as loan. Can be higher depending on how high your drop rate is. Drop rate is industry term for default rate i.e. when you dont come back foe item

Pawn is older than banking. One queen pawned crown jewels to fund a war. Forget who it was

This post has been edited by maxmillion: Feb 22 2020, 05:47 PM

In US drop rate is about 15%. Of the merchandise that drops, they make margin of about 35% over what they pay for it.

The segment that pawns items typically also buys the items they see in stores. These people have no self control. Poor financial management. They dont think about saving for items...they typically buy on instalment plans which also attracts interest...the listed lenders are very very sophisticated. They ML and data to determine how much they can lend you.

In US impossible to launder...they capture your ID. Also if item is stolen, police can confiscate and do not give you compensation.

A store has to wait 15-30 days after an item drops or is bought before they can sell it. In case it is stolen and someone reports.

You can get items for a bit of a discount but not much. They sell as close to retail as possible. Why wouldn't they try and get as much money as possible? In worst case they melt jewelry for scrap.

Mispricings arw more likely with merchandise. Sometimes store managers dont know what they have and misprice. Especially true for electronics and other specialty items.....they mainly use ebay to set price

Sorry. Just to be clear, they only use ebay to set price for items not ebay to sell items. Ebay is too expensive to list items. Eats into their margins.

Also, pricing of items decrease over time. You will see on certain price tags how much they are willing to sell item for after 30, 60 and 90 days. This is to deal with depreciation of technology and not keep too much stock on hand. Remember, the items you see on shelves is capital in the form of physical goods. You want to liquidate it as quick as you can for the highest price possible. Sometimes if they want to much, it just sits on the shelf and there is an opportunity cost.

The Nasdaq listed lenders are very very sophisticated. Not like Ah longs - short term intimidation and fear. The Ah longs could create a shadow banking industry but they are too stupid to think long term