Once considered a last resort for the desperate, pawnshops are increasingly going mainstream, with brightly lit shops, Facebook pages, and Twitter campaigns.
As the founder of a popular chain of pawnshops says, "pawnshops are the new Target."
Part of the reason is the down economy, and another is that the shops have been demystified by popular TV shows like the History Channel's "Pawn Stars."
From Groupon And Social Media To Zumba Class
Lawrence Kahlden, CEO of La Familia Pawn & Jewelry told Here & Now's Robin Young about some unique things his pawnshops do.
"We use Groupons, social media," he said.
One of his pawnshops even offered a Zumba exercise class.
Kahlden also says his chain prides itself on professionalism and cleanliness.
"Guys wear ties, women wear professional attire. We get our floors done once a month, we make sure it's well-lit. We're pretty fanatical on our cleanliness," he said.
Paige Marta Skiba, associate professor of Law at Vanderbilt University, says the shops look like a bank on the inside or even a retail store nowadays.
"They have become much more mainstream. Although that being said, pawn shops have been a really popular source of credit for Americans for a long time. They've been around since at least the 18th century," she said.
How Pawn Shops Work
"We do loans to customers on a short-term basis and we also do retail sales at a discount rate, about 25-75 percent of the new price. The loans are normally a short term loan, two weeks to four weeks," Lawrence Kahlden of La Familia Pawnshops said.
Someone will bring something in, a ring or a watch, they give it to Kahlden, who will give them a certain amount back in loan, but also with an interest rate.
Are Pawn Shops Predatory?
"They can be quiet expensive, but in fact, relative to other types of consumer credit-- especially credit cards even payday loans, they are cheaper. So it can be a cost-effective alternative to mainstream sources of credit," Paige Marta Skiba said.
Marta Skiba adds that people can get into trouble using pawnshops.
What has been your experience with pawn shops? Life saver or interest rate sink hole?
This segment aired on January 30, 2012.
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