Pawnshops go for the broke
Laid-off workers hock possessions to keep landlord, utilities at bay
First-timers are a bit shy. They make a beeline for the broker counter with stereos, television sets and other 'treasures' to hock, hoping to draw as little attention as possible.
'People come to pawnshops expecting a half-lit place where shady characters come to do their business,' said Earl Oller, owner of Silver Lining Jewelry & Loan in Northeast Portland and for 25 years president of the state pawnbrokers association. 'When they come in, they find that just isn't the case.'
Since Oregon's economy has swung lower than an old sweet chariot, many people have turned to pawnshops and so-called buy-sell-trade stores for monetary support.
'We see good people from middle-class families who have to put their wedding rings on collateral because they've lost their jobs,' said Cynthia Mouradain, sales manager for Pacific Gold Inc. in downtown Portland.
Shannon and Christopher Brough beat the old pawnshop stereotype by a long shot. With three young children at home, bills have been piling up since Christopher lost his warehouse job in April.
The Broughs headed for Silver Lining's loan broker in a whirlwind, carting in their television, computer and other electronic gadgets. They'd been to a pawnshop before and, frankly, they didn't have time for modesty.
'You want to know why I'm here?' Shannon Brough asked. 'Our electricity got turned off today. If we don't get some money over (to Portland General Electric) by 5 p.m., we'll have no lights and a late fee of $50 tomorrow.'
It was 4:45 p.m. when they arrived at Silver Lining.
Property forfeits nearly double
Pawnshop loans in the state have risen more than 58 percent in the last five years ÑÊfrom $20.8 million in 1997 to $32.9 million in 2002, according to statistics from the Oregon Division of Finance and Corporate Securities.
And the number of pawnshop borrowers who forfeit their hocked belongings has nearly doubled in that time, from 34,000 to 63,000. Forfeits statewide last year reached 18.8 percent of the total dollar value of pawnshop loans versus 17 percent five years ago, according to state figures.
'Forfeits are up to about 20 percent, easy,' said Mouradain of Pacific Gold.
Some pawnshop borrowers such as Lenna ÑÊwho declined to give her last name Ñ have no intention of reclaiming their stuff.
'I need the money,' she said.
'Last year I made $45,000. Since I was laid off, I've pulled in a whopping $408 a week from unemployment Ñ and that's taxable income. It's just a huge adjustment in standard of living.'
Many people like Lenna and the Broughs have found pawnshops and buy-sell-trade stores a viable economic option ÑÊeven though annual percentage rates on 60-day pawnshop loans currently range between 109 percent and 285 percent when all legal charges are calculated, according to Lee Proctor, financial examiner at the Division of Finance and Corporate Securities.
'My decision to pawn is easy: I'm trying to pay rent,' said Alex Cherry, a jack-of-all-trades. 'I don't want to go on unemployment because I feel like I'll lose face,' he said. 'I'll just pawn until I can find a job.'
Pawning seems to be growing even among solid-citizen types who presumably would have access to cheaper sources of credit.
'Most of our customers are middle-class people living paycheck to paycheck,' said Oller, the owner of Silver Lining, 2122 N.E. Sandy Blvd. 'They like doing business with us because they can handle their money issues by themselves, privately.'
Oregon statistics actually show a decrease in police pickups for stolen merchandise collected at pawnshops, which also may point to an upward shift in pawnshop clientele.
But Sgt. Randy Day, supervisor of the Portland Police Bureau's pawnshop detail, is quick to add that budget cuts have slashed the number of detectives monitoring pawnshops.
To help deter criminal activity, Portland police and the Division of Finance and Corporate Securities work to regulate pawnshops through interest caps, set terms for loans and mandatory serial-number checks.
'Pawnshops are audited every year,' said Sharlyn Rayment, the division's program manager. 'They are allowed to collect a maximum of 3 percent interest on a 60-day loan term that must provide an additional 30-day grace period Ñ 90 days in all.'
The state's 38 pawnshops raked in $2.2 million in interest last year, according to the division.
Online auctions employed
State oversight of pawnshops sets them apart from the multitude of buy-sell-trade stores, which go relatively unregulated except for a city ordinance that requires them to hold items for 30 days before resale.
'Pawnshops are more like banks,' Oller explained, 'while buy-sell-trade stores are more about retail.'
This difference may explain why pawnshops have seen a jump in revenues while business at buy-sell-trade stores has been soft.
'I don't know if it's just Oregon or what, but it's been a struggle for everyone,' said Steven Gunvaldson, owner of a Southeast Portland buy-sell-trade store called Quicksilver Trading Co.
'We've been buying a lot, but sales have dropped about 40 percent since 9-11,' he said. 'We have to be careful about the things we buy.' Home entertainment items and tools offered the highest buy-sell turnaround, he said.
'We spend about $5,000 to $10,000 on buying,' said Pacific Gold's Mouradain, 'and we just aren't able to resell those items.' She uses auction Web sites such as eBay to boost sales of hocked gold coins.
Silver Lining also uses eBay, Oller said. 'Since the Oregon economy is so bad, eBay opens up a national market,' he said. 'But we use the site only for guitars, electronics and collectibles Ñ jewelry really doesn't do well.'
But 70 percent of Oller's pawned inventory is made up of jewelry. Jewelry makes up 90 percent of the inventory at the six pawnshops owned by All that Glitters Jewelry and Loan. 'We don't even bother with eBay anymore,' said John Edmunds, the pawnshop group's assistant manager.
Getting through to Friday
It's harder to track the buy-sell-trade exchange numbers.
Tacee Webb, owner of Redlight Clothing Exchange, said her store gives sellers 35 percent of retail value in cash, 55 percent in trade.
Louis Richards recently sold a golf range finder to Cash on the Run, a Southeast Portland buy-sell-trade store. He bought the item wholesale for $29 but sold it for $8. Cash on the Run owner Toni Kotek estimated a $30 resale price for the item.
But the exchange rate didn't seem to bother Richards, who lost his sales job a few weeks ago.
'The money helps me get through to Friday,' he said. 'It's not much, but it helps.'