Mandy Collins
There’s something a little sordid about admitting you’ve used a pawnshop, isn’t there? Desperate people use pawnshops as a last resort.
But Andy Schwenk, who owns Andy’s Swop Shop in Bellevue, Johannesburg, says there’s a common misconception that only a certain kind of person uses pawnshops. ”I’ve had Mercs, Jags and Rolls Royces pulling up outside my store,” he explains.
”If you understand anything about the economy at the moment, you’ll realise that even rich people are battling. And you must remember that when a poor person loses their job, they lose a little, but when a rich person loses their job, they lose a hell of a lot. Their cars are usually bought on lease, and their houses bonded to the hilt, and a lot of the stuff they buy is on credit.”
Frank Baker, of Phillip’s Pawn Shop in Boksburg, says his shop sees more working-class people who have just run out of money, but agrees that there is still a stigma attached to using a pawnshop. ”We have two sections in our shop,” he says, ”the side where we buy things from people, and the side where we sell items. Many people prefer to come in on the selling section so no one will realise they are coming in to pawn something.”
Charmain (who would not tell us her surname), of Andr,’s Pawn Shop in Malvern, says she hears all kinds of stories from customers. ”Sometimes they’re having financial difficulties and need to pay off debts, sometimes it’s a child who is sick and they can’t afford to pay for the medicine. We see all sorts.”
For the pawnshop owner, pawning is a risky business. They run the risk of purchasing either stolen goods or appliances that don’t work, as well as the chance that the item won’t sell.
To counter these risks, and to help their image, pawnbrokers have tried to build safeguards through The Second-hand Dealers and Pawnbrokers Association.
Such precautions take various forms. For example, in many pawnshops, clients must show their identity documents, not just give their identity numbers. ”People who are trying to pawn stolen goods are unlikely to want to do this,” says Schwenk.
Baker says he finds they are offered stolen items in cycles. ”Once it starts, we have a week of two of various people trying to sell us stolen stuff and then it stops for a while,” he notes. ”But it’s not that common. We probably process about 20 000 transactions a year, and we might go to court five times a year because of stolen goods.”
All clients who pawn items have to sign a contract which stipulates the conditions under which the pawnbroker is purchasing that item. A basic condition in the contract is the period for which the pawnbroker may hold the object before selling it. This period ranges from a month to six weeks in most cases. The customer may call the pawnbroker and ask for an extension of the period.
The rate at which clients redeem their goods varies. Schwenk says about 92% of his clients fetch their belongings. Charmain says about 80% of her customers return, while Baker says only about 30% of his clients can afford to retrieve their items.
When clients do redeem their belongings, they pay a charge, usually a percentage of the price the pawnbroker paid and the time it was held. Some call this an interest charge, others a storage charge, but the bottom line is that clients pay more than they sold it for to get their things back.
But what do people pawn? Generally speaking, say Charmain and Schwenk, it’s appliances – televisions, video machines, hi-fis, cameras, vacuum cleaners – as well as jewellery. Tools are also popular items to pawn, and even furniture. In the case of furniture, Baker says, they employ someone who goes to clients’ houses, and gives them a quote on what the pawn shop is prepared to pay for their lounge suite. ”Our guy is busy all day, every day, doing quotes.” says Baker.
Buying appliances like televisions and video machines means that pawnbrokers have to be able to test that the item actually works. ”That takes time,” points out Baker, ”because we have to test it when clients bring it in, and then test it again before we sell it.” Jewellery also has to be tested to verify that it’s not well-crafted paste.
There are items that pawnbrokers won’t take – sometimes this is determined by resale value, or, as in Schwenk’s case, by the amount of space available in the shop.
”The space I have is expensive,” he points out, ”so I tend to pawn small stuff, because I can stock more that way. I won’t pawn stuff that’s been bought on hire purchase, though, and I don’t do car spares. I’m very dubious about those.”
Pawnbroking may have a seedy and desperate image, but Schwenk sees his business as helping ordinary people. ”To us it’s a service,” he says. ”We help people who don’t have the necessary collateral to get a normal bank loan – you can’t really take your television to the bank when you need money. And we help all kinds of people, from the normal man in the street to the company director who’s had to vote himself off the board to cut costs at a struggling company.”
Variations on the pawnshops are second-hand shops where customers can sell their possessions outright. An example is the 16-strong Cash Converter chain which buys items such as electronic and sporting goods outright for cash and then presents them in well-lit displays.
The strategy appears to be paying off – the local group is a franchise of an internationally listed company, and has expanded to Gauteng from the Western Cape.
ENDS