Sagging economy, high gas prices bring customers to pawnshop

FRED COUZENS/VIEWBoulder City Pawn owner Jarrod McClung shelves some of the DVDs his shop purchased from people needing a few bucks to tide them over until payday. McClung said many of his customers these days are selling or pawning property to get gas money. PAWNSHOP 2 ? (Almost the same caption as #1) ? Boulder City Pawn owner Jarrod McClung says the deteriorating economy is increasingly affecting his loan business since people who need money to pay credit cards or buy gas are pawning or selling items in greater numbers.PAWNSHOP 3 ? (Same as #3)PAWNSHOP 4 ? Boulder City Pawn owner Jarrod McClung says one of the hottest items he deals for are DVDs, which he buys for 50 cents to $2 each. With customers bringing in handfuls of DVDs at a time, it provides them with enough cash to buy a tank of gas until their next paycheck. fred couzens/viewBoulder City Pawn owner Jarrod McClung, shown counting cash, says the deteriorating economy is increasingly affecting his loan business because people who need money to pay credit cards or buy gas are pawning or selling items in greater numbers. Advertisement

Boulder City residents in increasing numbers are turning to the local pawn shop where they can find ready cash in these tough economic times.

So says Boulder City Pawn owner Jarrod McClung, who owns not only the store at 1644 Nevada Highway but also another larger store in the town of Mesquite that has a large customer base due to its proximity to Southern Utah.

"One out of every three loans I do, the customer states the money is for gas because the price of gas is so high," he said, noting that the most common item he buys are DVDs. "We buy them for 50 cents to $2 for each DVD, so that way if they sell us $10 worth of DVDs, they can get a couple of gallons of gas to get them through to the next pay period."

McClung, whose been in the pawn business for nearly 20 years, said pawn shops have had a questionable reputation in the past, but now that has changed largely because of the way the economy is taking its toll on just about everyone.

"Pawn shops have always been like everyman's bank, but lately it's used more by just about everybody," he said. "It's people considered to be wealthy, but cash poor. It's people with Rolexes, high-priced diamonds and gold. Sometimes, it's older people who have acquired some nice jewelry over the years. They find it easy to liquidate it into cash so they can pay their bills and their ordinary expenses."

With the economy declining steadily over the past year, McClung's statistics bear out what he's saying.

"In June of 2007, we had 175 loans, and this June, we had 220 loans," he said. "In May (2008), we had 180 loans, and in January of this year, we had 225 loans, a lot of which were by people who needed to pay off their credit card and Christmas debt."

McClung has two ways of getting cash quickly into the hands of people needing to buy half a tank of gas to get to work or pay that city electric bill.

He can make outright purchases of items on the spot after making a personal appraisal using Froogle, the Google Internet product search site, which gives him a current market selling perspective of the product.

He also can make a loan on an item, the same as pawning, which gives the seller cash at a fraction of the item's value, the amount of which must be repaid with interest to get the item returned.

"We base the (loan) price on desirability," McClung said. "The loan is a percentage of an item's value. It's an amount equal to about 50 percent to 75 percent of the retail price, depending on its condition. For example, if your camera had retail value of $30, the amount loaned to you would be about $24."

With monthly interest at 10 percent (plus a one-time service fee of $5) and a 150-day loan period limit, it would cost $41 -- $24 of that being the loan amount, plus a $5 service fee and $12 in five monthly interest payments of $2.40 each -- to get the $30 camera back.

The same holds true for the Mesquite store, which sees a lot of business from Utahns because the Nevada interest rate of 10 percent per 30 days for a maximum of 120 days is a better deal than Utah's 20 percent rate for a 30-day pawn period.

"Mesquite is busier by far because the loan base is twice as heavy and the percent out of pawn -- pawners who took the cash and ran, forfeiting their property to the pawn shop owner -- is less than Boulder City. It's 18 percent in Mesquite compared to 30 percent in Boulder City. It's the same kind of stuff, but it tends more to (be) jewelry."

That competitive advantage might be shaved soon by action in the next session of Nevada's Legislature since the 10 percent pawn rate hasn't been changed for nearly 11 years -- since Oct. 1, 1997 -- and remains significantly lower than payday and auto loan center's rates of interest.

Some might think pawning could give rise to an increased number of burglaries by those wanting quick cash to buy liquor or drugs, but McClung says that's just about impossible.

"Everything we take in goes in for a police check that the Police Department checks against its crime reports," he said. "We have a 10-day waiting period (for the police checks) before we can put anything out for sale. It's important people keep the model and serial numbers of their electronics and other valuable items so they can report them to the police if they're stolen."

According to Deputy Police Chief John Chase, Boulder City Pawn was instrumental recently in helping a member of the Boulder City Horsemen's Association recover items that were stolen from its corrals and taken to the pawn shop. When McClung provided police with a description of the items, officers noticed they were on a stolen property list and returned them to their rightful owner. McClung has always worked hand-in-hand with police, Chase said.

"He's been more than helpful in getting us information about items that have been pawned off," Chase said.

McClung said less than a quarter of a percent (about 1 out of 400) of items brought into the store are stolen.

While Boulder City Pawn accepts a wide variety of items, it doesn't take in all items for pawn.

"We won't take any broken merchandise, except for jewelry that could be melted down," he said. "We don't take dolls, china, collectibles and sports memorabilia, especially sports memorabilia."

The View attempted to talk to a few customers, but they declined to be interviewed.

Although sales currently are down 30 percent, loans are up 15 percent -- sure signs that the souring economy is causing people to run out of money before their bills are paid -- McClung says pawning is a financially viable alternative to credit cards and quick lending centers in the short term.

"If the borrower can get the loan paid back quickly," said McClung, "it's an inexpensive way to get a loan."