Pawn shops see more business as people pawn valuables to buy necessities

Rick Wagner • May 17, 2008 at 12:00 AM

Wayne Thompson with Lynn Garden Consignment and Pawn Shop holds a ring for sale at his store. Photo by Erica Yoon.


KINGSPORT — Two men came into the Lynn Garden Consignment and Pawn Shop last Wednesday morning, one carrying a sterling silver chain.

Two women came there late Thursday afternoon with a bookshelf stereo and DVD player in a plastic grocery store bag.

The two men left a few minutes later with $35 in cash but without the chain. They had pawned the item to get money for gas and other expenses but said they’d be back in 30 days to pay back the money, with interest and carrying charges, and retrieve the jewelry.

“We’re getting gas and stuff,” one of the men said as he left, declining to be identified. “We’ll be back to get it (the jewelry).”

The two women left a few minutes after their visit with $40 in cash. They had sold their items outright.

“We need money for gas,” Vanessa Pratt of the Lynn Garden area said of the stereo that was hers and the DVD player belonging to her friend, Judy Duncan.

“By the time I do what running I do, I’m out of money,” Duncan said on a day gas was selling for $3.69 per gallon at some Kingsport area gas stations.

It’s a scenario area pawn shop owners said is repeated much more frequently than it used to be as the price of gasoline and groceries continue to climb, and it’s happening across the country, according to nationwide newspaper and other media accounts on the Internet.

A veteran pawnbroker in Bristol, Tenn., said about two-thirds of customers like the men, who pawn items, return for them. But some, like the two women, have no hopes of getting the items back, so they sell them outright.

“Most people come back. Two out of three come back,” said Cheryl Brown, manager of Uncle Sam’s Loan Office on State Street in Bristol, Tenn. “Our sales are up across the board in all departments.”

That pawn shop has been in business for 100 years, opening in 1908. Brown, who’s family owns the business, said increasing gas prices have increased demand for pawning. The business was on 7th and State streets when it opened in 1908, moved to 6th Street when that location burned in 1956 and moved to its current location, the old Woolworth’s building, in 1992.

“It’s mostly gas and food, mortgages not so much,” Brown said of an increase that began in late February. “Our sales are up across the board in all departments.”

Media reports across the country indicate an increase in pawn shop activities as fuel prices continue to spike, while others are selling items for cash on the Internet, in yard sales or newspaper classifieds.

“We started really seeing the difference about two months ago,” said Regina Carrico, who with George France co-owns Bud’s Gun and Pawn over the Virginia line in Weber City. Carrico and France bought the business in December from Bud Hunnicutt, but she has worked there for 15 years. Carrico said guns, tools and gold are the most commonly pawned items at the business, which is licensed to sell firearms.

She said that about half of those who pawn items return to get them back in 30 days, although Carrico said she will hold items an extra week or so to give people a chance to get their merchandise back. She said some of the more offbeat items pawned include old toy train sets.

“It’s kind of sad you watch people come in and have to pawn their merchandise to get gas to get to work,” Carrico said. “And we have a lot of fixed income people who only get a check once a month.”

Back on the other side of the state line in Tennessee, Wayne and Tammy Thompson have operated the Lynn Garden Consignment Shop since Dec. 1, 2006. However, because they have had their pawning business open for only a month and pawn payments are just coming due, they don’t really know if two-thirds, half or some other fraction of their pawn customers will return for items.

But they and the two other pawn shops report they do know that the pawning and consignment business is booming as people are looking to pawn or sell items for cash, while others are seeking out bargains to buy. The consignment business has a mix of antiques, collectibles, children’s toys and furniture, to name a few things. A laptop computer and car stereo and CD player are also among pawned items at the business, although they will not be for sale unless the owners don’t retrieve them as planned.

“We just started the pawning four weeks ago, and it’s been wide open since we opened,” Wayne Thompson said. He said most customers seeking to pawn or outright sell items needed to buy gas or pay utility bills and that he expanded the business because he thought the highly visible location would lend itself to the pawn business.

“People are having to watch their money because of gas,” he said. His wife said that folks selling jewelry and other items at yard sales and flea markets generally are becoming more informed about an item’s value.

Thompson said jewelry is the most common item pawned at his business, closely followed by electronics. He said tools also are common. The Bristol and Weber City operations also deal in firearms, which the Thompsons do not. DVDs are another common item that end up in pawn shops, Brown said.

“Some people think their gold is worth a lot more than it actually is,” Thompson said, while others are pleasantly surprised at what an item brings.

One of the two men who came in with the silver chain said another pawn broker told him she was not taking that kind of jewelry right now. They sought a $50 loan at the Thompsons’ business, but took the offer of $35.

Pawning rules

In Tennessee, Brown and Thompson explained that by law items that are pawned must be held 30 days past the due date before a pawn broker can sell them. Interest and fees can vary among pawn shops. Brown said Uncle Sam’s (which is not part of a chain but used to have the same owners as a similarly named business in Johnson City) charges 2 percent interest per month and an 18 percent service charge.

So to get back a ring pawned for $100, the owner would have to pay $120 to $100 in principal, $18 for the service charge and $2 in interest. Or, the owner can re-pawn the item and leave it another 30 days.

“It’s like a storage fee in a way,” Brown said. “We have a lot of hunters who do that so their firearms don’t get stolen out of their homes.”

Sometimes those seeking to pawn something will decide to sell it instead, but Brown said it is usually vice versa.

“If I can’t offer them what they like, they’ll pawn it,” Brown said.

Everyone who pawns at Uncle Sam’s must present a photo identification — a driver’s license, military ID, passport or state-issued ID — and make a thumbprint. Pawn shops also keep records of serial numbers and model numbers to assist police in tracking stolen merchandise.

For those who may have second thoughts, even when Uncle Sam’s buys something, it still holds the jewelry items for at least 30 days, and the other things for at least 20 days. Any pawned item is held for at least 30 days before being put out for sale to the public.

Even without the increase in gas prices, interest in selling gold items has skyrocketed since gold’s worth has grown. Although at one time it was bringing more than $1,000 a troy ounce, the current price of more than $850 an ounce means gold is still a valuable commodity.

Thompson, Brown and others who buy gold from the public say media attention and advertisements on television have raised people’s awareness about scraping out gold. Carrico, co-owner of the Weber City pawn shop, said most people are surprised how much their scrap, worn out or out-of-style jewelry is worth.

“It didn’t stay at that (high) long,” Brown said, adding that gold went almost as high, accounting for inflation, about four years ago.

Golden opportunities

Pawn shops aren’t the only place to get money for gold. Auctions houses, such as Olde Tyme Auction in downtown Kingsport and Auction Time in Traders Village, will sell gold items and most other merchandise on consignment and sometimes buy them outright or know buyers, while people also sell gold in newspaper classifieds, on the Internet’s auction-style eBay and Craigslist, a free Internet listing service. And some jewelry stores, such as Baker’s Jewelry in Kingsport, will buy gold or take scrap gold and forge it into something new for customers.

“It’s a great time for people to do it,” Joe Baker, owner of the store, said of selling old, broken or outdated gold jewelry. He said some people are switching from yellow to white gold and are getting rid of their yellow gold, while others are taking advantage of the higher prices.

“We have a lot of people who have just accumulated gold over the years,” Baker said.

“Even if it wasn’t an economically bad time, it’s a good time to sell because the market has risen basically to an all-time high,” Baker said, adding that the high gold prices make selling a sometimes profitable option regardless of the economy or the price of gas. “One year ago, gold was about $650 an ounce.” The average over the past 25 years has been about $300 an ounce, he said, while the last historic peak was around 1980, accounting for inflation.

Although he used to joke about getting dental gold fillings, he said in the past six months or so he gets at least some gold fillings every week. He said he doesn’t do much work with composites, like computer chips and parts that can be sent to a refiner to be reclaimed.

Most gold in the United States is 10 karat or 14 karat, which stands up to wear better and is what most people think of as shiny gold. The softer 18 karat and 24 karat, the latter pure gold, are softer and more yellow. They are the most popular in Europe. However, Thompson and the other pawn shop operators said that sometimes people have jewelry they think is gold when it actually is gold plated, and Baker said some jewelry is gold toned.

Baker said few of his customers are looking to get money to fill up a gas tank or buy groceries, but they may use the money to travel, put in the bank or buy more jewelry, including sterling silver, tungsten, stainless steel and titanium.

“We’re seeing a lot of alternative metals used,” Baker said of new jewelry.

Reclaiming metals

Other metals are worth much more than gold, and sometimes for those that are not, sheer volume makes up for the per-ounce price — if you’re selling a whole car.

Folks have been collecting aluminum cans since the 1970s, as well as scrap aluminum doors. A local aluminum buyer, near the corner of Brookside Drive and Stone Drive, recently had aluminum wheels brought in by a customer alongside old aluminum doors and other scrap aluminum.

On the high end, platinum sells for more than $2,000 an ounce, and rhodium sells for $9,000 an ounce. Both are present in catalytic converters on modern emissions-controlled vehicles, making the converters sought after in the metal reclamation market.

The rash of copper thefts over the past year or two came after copper prices escalated, making old copper pipe and wiring lucrative to recycle.

As for scrap vehicles, Kingsport Auto Recyclers, on West Stone Drive opened almost a year ago and was paying about $8 per 100 pounds for automobiles and smaller trucks when manager Larry Barr went to work there in October. Now, the price has jumped to $11.50 per 100 pounds, and sometimes trailers carrying cars bound for the crusher there line up all the way to Stone Drive.

Barr said most people remove the converters because they know about the value. Fuel tanks also must be cut off, holes put in them and then they must be put back in the vehicle, although the business will offer to take care of that in exchange for deducting 250 pounds from the sale price.

For an average car of about 2,850 pounds, he said the yield is $327.75 if the gas tank is removed, punched with a hole and placed inside the vehicle. However, he said older vehicles from the 1950s or 1960s, like a 1968 Ford LTD, weigh in at about 3,500 or 3,800 pounds, while small compact cars might be about 1,800 pounds. He said a 1970s Opal Cadet and a 1968 International Travelall — an early SUV — were among recent vehicles brought to the business.

“It (the Opal) was very rusty and had a huge snake in it, maybe two,” he said. (For the record, the business doesn’t buy snakes and would just as soon not take them.)

A few times a week, someone will actually drive in a car to be sold and crushed, Barr said. He said those are mostly older gas guzzlers. To sell a car, the person bringing it must present a photo ID, and a copy is kept on file.

After the cars are crushed in Kingsport, they go to a shredder in Johnson City and come out “looking like leaves,” Barr said. He said the metal then is recycled domestically or, in many cases, goes overseas to satisfy the increasing demand for steel there.

The business also takes some “long” steel, which is one-fourth of an inch thick or more, for $8.50 a pound, but he said most of the scrap metal goes to places like Kingsport Iron and Metal and Johnson City Iron and Metal.

Aside from getting some cash, Barr said that area cities and counties are cracking down on the outside storage of vehicles that don’t operate. With scrap prices up, he said some people are making a living buying vehicles — or sometimes having them given to them — and scraping them out, sometimes taking off motors and parts along the way for reuse.

Barr said it’s mostly driven by the price of metal, the price of gas and groceries and the need for or want of money.

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