Pawn shops will always be popular. Yes, they certainly do take advantage of the poorer people in society but at the same time, they allow people who wouldn't be able to get a bank loan to access funds which might beneeded for an emergency. They are a double edged sword.
Pawn shops are very popular in the city I live in. At one time there was one on every corner in the city. There were just too many of them so eventually the majority of them went of business. There are still a few of the around and they do great business. They can be a good thing but at the same time I have seen people lose precious family hierlooms because they pawned them and could never afford to get them back.
The main issues in most of the businesses are the barriers to entrance, meaning, the investment. Once we have capital to invest we can really change our life.
Pawnshops here are having a heyday because they are now authorized to operate as a money remittance outlet. Particularly for the pawnshop chains, the remittance operation is a big boost to their revenue since a big part of Metro Manila population have their families in the province so sending money is a regular task. That remittance operation also increased the pawnshop customers in the pawn business since the public is already going to the pawnshop for remittance, why not pawn when they need cash?
A pawn shop would be a good business to get into because people pawn their items when they really need money and you get to hold them as a promise to pay back the loan. The loans are always for less than what the item is worth so you can sell the item if the customer does not come back to pay the money. Sounds like your cousin was a smart investor.
Yep, that's the main logic in making money, buying cheap and selling more expensive, that is why they make good money and there are so many of them.
They also make a decent profit from the interest rates they charge on loans as well now, as a lot of pawn shops also seem to be able to offer short, payday loans. While I'm not against them, I do think they are screwing the customers more and more, and putting people into worse debt than what they was in before.
On the contray, pawnshops have lesser risk, actually I see it as very minimal in terms of risks because they hold the collateral. In the event that the borrower would not pay the loan, the pawnshop forfeits the pawned item. The most popular item to pawn here is the cell phone because almost everyone has a cell phone. And according to pawnshop operators, a cellphone is the easiest to rate in value because it has standards particularly the ******. The only risk is when they forget to test and the phone was not working.
In my country, there are a lot of pawn shops, but unlike the ones you see at the TV, most of them don't accept anything but gold, white gold, top notch phones and electronics and that's it. Of course, the items are way undervalued. For instance, if you go with a $600 phone (the retail price), then you'd barely get a $140-160 loan.
