That’s 480% of what I originally borrowed.” “I ended up paying interest on it for 24 months, $720 in total. “I had to pay $30 a month in interest,” she told the website Student Loan Hero. When Christine Luken, a counselor in Cincinnati, fell on tough times, she took her grandmother’s ring to a pawn shop and was given a $150 loan. The average pawn shop loan is just $150 - but even a small loan can rack up considerable interest fees for someone in financial straits. This figure jumps up to 40% among lower-income earners, who often don’t have enough cash on hand to cover a $400 emergency expense. “He needs fast cash, and I’m the most convenient option.”Īccording to the National Pawnbrokers Association, 7.4% of all US households have frequented a pawn shop. “The average customer might be living paycheck to paycheck, or maybe he had an unexpected expense emergency come up,” says Jimmy Rodriguez, the owner Max Money Pawn in Houston, Texas. Pawn shops are generally the last resort for people in lower-income brackets. The typical pawn shop transaction goes down like so: And along the way, we learned a few other things about pawn shops that will make you question whether you should do business with them at all. We wondered why that was, so we went looking for an answer. If you walk into 5 different pawn shops with that gold watch, you might get offers that differ by 200% or more. Collectively, the loans, purchases, and sales pawn shops make on these small items add up to a $6B+ per-year industry.īut not all offers are created equally. What do you do? You head to the pawn shop.Įvery year, some 30m Americans frequent the country’s 11.8k pawn shops in the hopes of securing a loan in exchange for collateral.Īs one pawn shop owner tells The Hustle, “everything that can be pawned will be pawned:” Wedding rings, shotguns, antique horse saddles, prosthetic limbs, and any electronic device imaginable. All you’ve got left is the gold pocket watch your great-uncle Chester gave you. The bank won’t help you, and the payday loan place wants a 400% annual interest rate. You’re down on luck, your funds are running low, and you’re in dire need of a few hundred bucks in cash - ASAP. This edition of The Hustle was brought to you by Diversyfund… Building wealth like the 1%. Take the same item to 4 different pawn shops and you might get offers that vary by hundreds of dollars.