July 2, 2022
  • July 2, 2022

The second oldest profession in the world goes online

By on March 11, 2021 0

“This is definitely more like the daily activities we do online,” said Hill BusinessNewsDaily.

Pawnshops offer short term loans based on the value of personal items such as jewelry that customers are pledging as collateral. At the end of the loan period, the customer can recover his property by paying off the principal of the loan with interest. If the loan is not repaid, the pawnshop takes ownership of the pledged items and is free to resell the pledged property.

It’s basically like Pawngo.com works, but with a different logistic architecture. Instead of bringing their items to a physical location for evaluation, customers answer a few online questions about the items they want to pawn or sell outright. Pawngo will reply with an estimated offer via email.

Bids are made up to 75 percent of the value of the item. If the customer wishes to accept the Pawngo offer, they will print a FedEx label from the Pawngo website and ship the item at Pawngo’s expense.

Hill said that once the item is delivered, a team of certified evaluators will check the item and make a final offer. Once the offer is accepted, the funds are immediately transferred to the customer’s bank account and the item is stored in a secure pawnshop fulfillment center under 24-hour video surveillance.

Hill said that once the loan is settled, the item is fully insured back to the customer at Pawngo’s expense.

Hill also took an interest in the upscale pawnshop market, focusing primarily on luxury goods such as jewelry and diamonds, luxury watches, precious metals, branded handbags, cameras, Apple products, musical instruments and collections, and certified art.

He said they would not accept televisions, video game systems, firearms, car audio and point-and-shoot cameras – the kind of stuff that is a staple commodity for many pawnshops.

“Our company is dedicated to high-end luxury assets,” said Hill. “Banks do not make loans for this type of asset.”

A typical customer, he said, is a woman in her forties. Half of the clients are natural persons and half are small businesses.

Hill said the largest loan Pawngo made was $ 100,000 for an 11-carat diamond ring valued at $ 250,000 to $ 300,000. He also accepted less conventional items, such as the 1980’s $ 800 Dom Perignon champagne bottle and an 85-pound silver bar. Pawngo also bought a Gibson Les Paul 2001 Teal from a customer, signed by the cast members of “That ’70s Show” for $ 1,871.78.

According to the National Lombard’s Association, the average loan to a pawnshop is $ 150 for 30 days. A typical Pawngo loan is $ 3,000 for four months, Hill said. The operation offers loans for up to six months with an interest rate of 3 to 6 percent. While there are no principal repayments over the life of the loan, interest is charged directly to the customer’s bank account each month.

According to Pawngo, the average interest rate for local pawnshops is 15 percent, and in many cities it rises to 25 percent, making Hill’s business cheaper for consumers. Pawngo plans to make up for the difference in the margin with the volume as the scale of online operations grows.

“Our margin is much smaller than our traditional operations,” said Hill. “But we are able to scale on a national scale.”

The Pawngo buyout rate of 85 percent reflects the national average. The company sells 95 percent of the non-redeemable items in bulk at stores like eBay and the Amazon Marketplace.

Pawngo currently employs 30 people, but plans to increase employment to 125 to 150 by 2014 as business expands nationwide. Pawngo is backed by Daylight Partners, Access Venture Partners and Lightbank, a $ 100 million fund founded by the founders of Groupon.

“We are able to develop the culture we want and the people we want to hire,” said Hill.

One of the attractive aspects of pawn shops loans for many consumers is that no credit check is required and the transactions do not affect the customer credit reports. They also offer an alternative source of financing for people who do not have a banking relationship or are not eligible for traditional loans.

“The service we offer is something that banks cannot fulfill even in good times,” said Hill.