Who Uses Pawnbrokers?
Pawnbroker customers are hardworking consumers who typically lack access to traditional short term lending options. These individuals often live paycheck to paycheck and experience cashflow problems from time to time. Pawnbroker loans are used to meet cashflow needs mainly brought on by unexpected financial emergencies, including medical expenses, home and car repairs, childcare expenses, as well as other household necessities such as utility payments, rent and mortgage payments.
At Top Dollar, our average customer is 42 years in age and obtain loans averaging $72.
The Lending Process
Pawnbroking is society’s oldest lending institution that dates back to early Greek and Roman civilizations. The lending process is simple and straightforward. Customers present their own personal property as collateral to obtain small short-term loans. The nature of the collateral presented includes everything from computer equipment to bicycles to jewelry. The collateral property is available for redemption until the expiration of a contract. When the customer is ready to redeem the loan, his or her property is returned upon repayment of the loan and a small fee.
To avoid lending against stolen goods, pawnbrokers are required to verify the identity of each borrower by scanning a government issued ID such as a drivers license, collecting the borrower’s thumb print, and videotaping the transaction.
Credit background checks are not required to obtain a loan, nor are there credit consequences to the borrower if he/she decides not to redeem his/her collateral. Items that are not redeemed are sold at an affordable price to retail consumers.
Contract Terms & Fees
Terms and conditions specified in pawnbroker contracts, including the interest rate, are regulated by the state. In Maryland, contract periods are limited to 30 days with the option to extend the contract.
The state of Maryland also mandates that pawnbrokers collect the following information from consumers who enter into a pawn transaction:
• Name and address;
• Date of birth;
• Gender and ethnicity;
• Government-issued form of personal identification;
• Date and time of the transaction; and
• Description of pawn items, including serial and model numbers, and identifying markings.
Federal Laws & Industry Regulation
To protect consumers, the pawnbroker industry is highly monitored and regulated. A number of federal laws govern how we do business, including:
• USA Patriot Act;
• Truth-in-Lending Act;
• Bank Secrecy Act and IRS regulations requiring reporting of certain cash transactions;
• Trading with the Enemy Act and related Executive Orders and regulations; and
• Privacy provisions of the Gramm-Leach-Bliley Financial Services Modernization Act.