Imagine that you take a gold ring to a pawn shop. You need some cash, and the employee at the register says that he’ll loan you $35 if you pawn it. Should you do it? Or should you try another shop?
Last year, we visited eight Detroit pawn shops with a violin, an iPad, a gold ring, and a diamond ring. Our goal was to answer this question. We wanted to see whether pawn shops offered similar prices, or if people should shop their items around.
We discovered huge disparities. Items that one pawn shop offered hundreds of dollars for were valued under $100 by others, or didn’t even get an offer.
This experience led us to found PawnGuru, a website where people can connect with multiple pawn shops, and we now have data from thousands of pawn shop bids and transactions. It confirms what we experienced during our visits to pawn shops in Detroit: Pawn shops offer wildly different prices.
How Pawn Shop Prices Differ
When we went around Detroit last year, trying to pawn a few items, we experienced firsthand the different prices that pawn shops offer—even for common items.
One store offered us $50 for an iPad, even though 5 other stores offered us $100 or more.
When we tried to pawn a diamond ring, the offers from different stores ranged from $65 to $1,060.
According to the National PawnBrokers Association, 30 million Americans routinely rely on pawn shops. Since most pawn shop customers are unbanked or underbanked, pawn shops are one of the few ways they can borrow money.
But for such a large industry—American pawn shops make nearly $15 billion in revenue each year—there’s very little transparency. For many customers, the difference between the highest and lowest bids we’ve seen for pawned items could be the difference between keeping the lights on and not being able to pay the electric bill.
It's increasingly common to use a smartphone or laptop to conduct research before buying or selling an item. Why should the pawn world be any different?
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