You hand over a watch, walk out with cash in five minutes. No credit check, no paperwork, no consequences if you never come back. It should be the worst lending model ever invented. Instead it's outlived empires, currencies, and every bank that looked down on it.
The guitars, the tools, the rings on the shelf? Barely the business. The real product never sits on a shelf, and the shop's best customer has never once brought in a treasure.
This is how pawn shops make money.
If you enjoyed this, subscribe. New stories every couple of days.
Drop a comment: would you ever walk into a pawn shop?
And if you know someone who needs to hear this one, send it to them.
0:00 Intro
1:04 How a pawn loan actually works
2:39 He's not lending to you, he's lending to your stuff
3:32 Why the shop doesn't actually want your watch back
3:57 Where the real money is: interest
5:28 The experiment that exposed the industry (same diamond, 600% apart)
7:01 Is it all stolen goods?
7:47 Why gold is the one sure thing
9:18 Who actually uses pawn shops (and why banks won't)
11:37 Wall Street discovers pawnbroking, then Pawn Stars
12:57 The real best customer: the repeat borrower
14:26 The machine under the machine
15:09 So that's how pawn shops make money
#PawnShops #HowXMakesMoney #MoneyExplained#Money #Business #HowToMakeMoney #Finance #Economy #MakeMoney #Wealth #Brands #Entrepreneur #MoneyTips #Investing #Economics #HowItWorks #Explained #Educational
Have you ever been to a Pawn shop and loaned, sold or bought something? What was it? Let us know!
It’s been many years since my parents particularly my dad took me to a pawn shop I don’t think he sold anything to my knowledge but I remember him buying things. but now this 21 Year old knows how to get some money for his business without having to deal with credit companies and Banks BS! plus there’s a good chance down the line I will make a pawn shop business that someone runs on my behalf lol😆 but keep making the videos at least there’s ba human voice and body behind them!
I bought guitars at a pawnshop in my local city 10 years ago. I paid it all in cash and they were all high-quality so high-quality. In fact I questioned if they were stolen, I always buy vintage and quality goods from decades ago at a pawn shop the only fear I have is being stabbed on the way out.
No but this video got me thinking i might want to check them out
I live next to a poor city with high unemployment And it’s been that way historically since my grandfather was a little boy actually probably before he was born
So there is a good representation of pawn shops
Im for anything i can do to stop the insane greediness of the cc companies and banks
Not that this is that but it might be a cool experience nonetheless
I was in and out of work and needed cash, bought plenty of gold item and would go back and forth when I needed the cash. Had a moment when I couldnt afford to repay the interest, spoke to the broker and we worked things out. 15 Years later I go in there and buy items like watches etc. These types of businesses are badly needed
Back in my younger days I went to pawnshops all the time as a buyer. Brought tools, gift cards, an old Whizz motorized bike once, etc over the years. only went to 1 as a seller but it didn’t work out. Paid a little more than I wanted to for a storage unit and it had new tools in the back. I noticed there was a pawn shop in this town so I decided to see if he was interested in them but got turned down because I didn’t have a receipt for each tool, just my copy from the storage auction but that wasn’t good enough. Luckily he didn’t buy them because I did great reselling the tools later that month but was hoping for faster money so I could hit a storage auction the following day in a different town but it worked out in the end.
We don’t have to and don’t typically take photos of your ID however we do have all the info off of it in your account and we DO call if you’re loan is about to come out for sale especially if you’ve extended months already. We are a business that relies on customer relationships and reputation. We don’t want to upset customers because we’d like for you to keep coming back and that’s whether offering you a loan or selling you an item. This is a good video otherwise.
That sounds good, especially in the age of decluttering. I’m going to do this more for the sake of decluttering and for the purposes of buying.
You fleece a sheep for ever more but you can only kill it once
Calling could cause problems if the pawner doesn’t want family members to know for various reasons
@Richard-n7g All he would have to do is tell them to note that.
In Fla we had to get a thumb print on 3 different places on the paper work and copy all the info on the ID. and a detailed description of the item being pawned that was sent to the police by 6pm every day.
I’ve always wondered if a pawn shop starts with a few items or a bunch of cash. This video makes me lean toward a bunch of cash.
100% bcz they count on people in trouble needing money with valuable items. My father pawned his & our mom’s wedding rings for $50 when we were homeless to buy dinner and gas while he was out of work and we lived in a van. No way he was going to pay it back so the pawn shop easily made $300+ on that deal many years ago.
My father had a pawn shop in DR. Tge cash it’s what matters, you can have almost no items and as long as you had money, clients will come.
A problem you could run into is using all your money, even in good items and having your money tied in inventory. When times are bad and people want money it can be difficult to keep the money flowing
@j887276 the problem was buying the rings in the first place .. why pay so much for a damn rock …its just gold ..you can find it in rivers .its only value is in industry (its a great conductor for electronics) why the fk would you pay so much to wear it on your body ..even the jewelry people wont pay you half what you pay them if you sell it back 😂😂 that should let everyone know its a con
I never knew how pawn shops worked, thank you!
Worked in a pawnshop many years ago in California. There is paperwork , a copy of which goes to law enforcement at the end of each day.
Yeah that’s what they said in the video
I know people who are in and out of pawn like a pay day loan.. they pawn all their stuff, pay interest for a few months, finally catch up and get it out.. 2 weeks later something comes up and it goes back in pawn and the cycle continues.. it’s nuts.
Let me guess; car repairs? Or maybe illness or injury, resulting in a combination of expenses and being out of work. Most workers are being very carefully kept on the balancing beam of the cost of working being paid for with their paychecks. The inability to ever “get ahead”, and instead, the slow slide into debt, it very much on purpose.
@misspat7555 95% chance if someone falls behind continuously, it’s on them. I’ve never met a person who is panicking every time the rent comes up who actually spends their money judiciously. Ever. Not once. They still drink, and maybe buy smokes, maybe eat out, or see a movie, and buy a Coke when they’re thirsty in the middle of the day instead of drinking water. Or they have kids when they know damn sure they can’t really afford it. Are they buy too expensive of a vehicle, etc. No sympathy.
But without it? They would be royally F’ed, been there and done that
@misspat7555 Yep, thats the system working as intended.
I used to be a Pawnshop Assistant Manager. Listen to this guy!
In which country? In Canada, they definitely take tons and tons of stolen goods, or at least they did until a bit of a crackdown. If you know the owner, chances are you can get access to the “special room” where the goods they can’t publicly display are. Tools are the big thing up here.
@jasondashney
“chances are you can get access to the “special room” where the goods they can’t publicly display are.”
Well, why all the hassle getting to “know people” (who then can hang or blackmail you)? For the low prices a pawn-shopper gets all that stuff, it’s easier to sell it online (under false identifies) or get rid of the stuff selling it extra cheap via flea markets.
My father worked in a pawn shop in Pueblo, CO for some time and throughout his life frequented every shop in town for items he could (especially tools and guns) buy and resell else where for a profit. When my wife and I visited him we would make the rounds of five or six pawn shops he preferred. For him it was making money, never borrowing. I doubt he ever pawned anything himself, it was making money for him.
Great shopping if you know what you are looking for/at
@ronv6637Same with huge estate/yard/storage sales. More than half of our house has decent furniture from it.
@ronv6637true, I buy fine jewelry at pawn brokers.
This can also work between friends. So if a friend asks to borrow money, but you’re unsure they’ll pay you back. You ask for a desirable item as collateral. You like their record collection for example, it’s worth $2000, but they want to borrow $500. They’ll quibble “but you should lend me the exact value of the asset”, to which you counter, nope. I don’t want to buy your record collection at full value, and besides it’s just a loan. With zero interest. However, unfortunately, they’ll probably never repay the loan, but you got a great deal on the collection, with no hard feelings. Though the friendship will likely be fractured. But this is how I handle friends wanting to borrow money.
If you lend money to a friend and they don’t pay it back, that should be the end of the friendship anyway. Getting their stuff is just bonus fries.
Sorry Jason but Nope.
If a close friend asks to borrow money for some reason and you have it available then it should ALWAYS be
considered a gift. An actual loan between friends can destroy that friendship quicker then a hot knife through butter.
If this person never pays you back then you know they weren’t a friend but the request for “Payback” is what begins the death spiral
of that friendship due to the stress that it brings to both parties.
I know several in Arizona that are just operations laundering drug money… how much they paid out & how much they made make great opportunities to put thousands in the bank (pat taxes on) then have “clean” money.
Friends don’t pay you back: “consider it buying out of the friendship, dodging a bullet.” 👍
If a *friend* *needs* money, give it to them.
If a friend *wants* money, they need to reconsider their spending habits.
If an “friend” wants money … GTFOH!
Next, do a video on the gift and prepaid card industry.
This was a REALY well made video , loved it
Pawn shops were essentially like the first credit agencies for a replacement for a credit card
You didn’t have the money right now but you would give them something as collateral
It’s a square deal
Around my area you’ll only see them in and around poor neighborhoods and I don’t think most of my peers who at least grew up lower middle class consider them as an option, but they probably should
Reason why Pawn shops continue to use the 3 golden balls…. That’s for people who can’t read. They see the 3 balls, they instantly know its a pawn shop.
I do not know if this is true or not but it is a very interesting thought.
Considering that roughly 45 Million people in this country are functionally illiterate it makes sense.
1 buy 2 sell 3 trade
Three gold balls weren’t balls. They were pills.The Medici were doctors;”Medici” means “Doctors” in Italian. Their coat of arms featured three golden pills.
@elcastorgrande Ask any pawn broker, today. They all refer to them as balls.
Same with the barbers pole, the red cross at the hospital and the scales at a lawyers.
Pawn shops near military bases are gold-mines! As I knew when I was in the Army, “GI’s will pawn anything that isn’t nailed down, and if it IS nailed down, they’ll pawn something to get a hammer and rip it out”.
Killeen Texas.
@leedoss6905 Colorado Springs, Colorado! My uncle’s shop.
That’s so fcuking sad to hear. Our military personnel should be paid more.
@Satchmoeddiethey get paid plenty it’s just many of the idiots go through money like it’s water.
Rich on payday and broke the next day.
Plus there are plenty of ripoff cons in town ready to screw you out of it.
Especially car dealers.
My hometown used to have a base. Pawn Shop was 100 yards outside the north gate. Used to be loaded with steel pot helmets, web gear, M-65 jackets, jungle boots, ammo cans, you name it.
Years ago, I owned a photography studio. I also did location photography, where I took a portable studio to a location and photographed groups of people. I employed a photographer who lived 3 hours from me, giving him his own studio equipment to use. One day I notice some stickers on his Studio equipment, rather, my Studio equipment. He had been pawning the Studio equipment on Monday and picking it up on Friday to use for me over the weekend. I immediately took it back and simply met him with the equipment on the weekends that I used him. If he had failed to pick it up from the pawnshop, I would’ve been out $5000.
About 50 years ago, I owned a dental lab. We made crown and bridge work for dentists. This was back in the day when gold and silver was very inexpensive. As a side hustle, I purchased scrap gold and silver. Most of these were in the form of class rings, wedding bands, etc. The making of anything of gold and silver has to be casted from a plastic mold. There was always a lot of grinding to do to shape the metal. We were in an old building that had a carpet. Carpet always needs vacuuming. Every six months I would gather up the vacuum bags, put them into a large 30 gallon drum and ship them to a gold processing plant. A few weeks later, I would receive a check for around $2000 or so. That was that one gold and silver was a fraction of what it is now. I purchased a scrap gold by the penny weight. It takes £.20 weights to equal 1 ounce. I forget the exact numbers, so I’ll just say a class ring weighed 1/2 an ounce, 10 pennyweights. Keep in mind that none of these items or Jewelry were pure gold. If they were pure gold, they would get bent every time someone shot the hand of a person wearing their wedding ring. A 14 carat gold ring consist of a little more than 50% gold, with the rest being other non-precious metals. Women, recently divorced from their husband, could not understand why I would want to pay $25 for a wedding ring that cost 15 times that. I used the following analogy. “If you purchase a brand new car for $15,000, take it to a junkyard and crush it down, it will not be worth $15,000. It would be worth the scrap value of the day. Take your $300 wedding ring outside and beat it with a hammer, bring it back to me and I’ll still give you $25. Take the diamond out and keep it. Beat the ring with a hammer and I’ll still give you $25.” Back then, there were still coins from the 1960s that had silver in them. I purchased them based on a percentage of the face value. All of that has changed now. Occasionally, I would purchase Gold dental work from dentists after they had replaced an old crown with a new crown. They would simply take the gold crown out, without giving the patient any money for it. Also, funeral homes were notorious for taking the gold out of the mouth of a deceased person. Once those lips are sealed, “Dead men tell no tales.” So if you or a loved one still has gold in your mouth, silver or gold jewelry, and you think you’re gonna be buried with it, have I got news for you! 😂
I always wondered why, when I wandered into one, that they never really cared if I bought something at their “Store” or not.
Now I get it. Thank you ~
I used to work at a pawn shop (specialized for gold, silver & luxury watches) and this video is quite accurate.
If you want to be successful i can give you guys a super helpful tip: just be f’ing nice to the people. They are human beings with money problems. My(ex) boss was a super nice guy and wasn‘t counting pennies. For example: So when a single mom had already paid alot of interest and there were still like 20€ or even 50€ left, my boss just gave it back to her so she doesn’t have to pay for an extra month. The customers loved him and everytime they wanted to go to a pawnshop most of them didn’t even compared prices, just because he didn’t try to do any shady tricks while they were on their low anyway. He had quiet fair prices also, but being nice was the reason why everyone loved him.😅
I remember the case from the single mom especially because she came to our shop like 20-30 times over the years and always mentioned how much she loved the customer friendly service at our shop.
An Asian friend told me that pawn shops there are often fronts for illegal gambling.
The pawnshop model is pretty clever. Turning short-term loans and resale into profit is interesting.