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<br />STARTRIBUNE.COM � TUESDAY, APRIL 1, 2008
<br />Pawnshops: Where a bust can be a boom
<br />Max-It Pawn mana�er Cory Dunn and assistant manager Faith Switzer, right, talked as customer
<br />Nancy Mikrut tried on a ring at the Coon Rapids pawnshop recently. The current credit crisis, which
<br />has included a spike in home foreclosures, has created for many a need for quick cash.
<br />By PAM LOUWAGIE �
<br />plouwagie@startribune.com
<br />The average pawnshop sees a lot come
<br />through its doors: engagement rings, Ns,
<br />gu ita rs.
<br />But consider this: In recent years, the
<br />Burnsville-based Pawn America chain has
<br />given quick loans on an original Picasso, a
<br />26-foot cabin cruiser, a$75,000 flawless
<br />diamond and dozens of other luxury items.
<br />And as the economy worsens, the chain's
<br />owner expects he'll see more high-end
<br />merchandise pledged as collateral.
<br />Now Pawn America is offering a more
<br />discreet way for the elite to hock their goods.
<br />Called "Premier Loan," customers are
<br />welcomed into a modern conference room in
<br />a Burnsville office park, where store officials
<br />will research an item's value, the parties will
<br />agree on a loan amount and the store will
<br />cut a check.
<br />"We provide loans to people from all walks of
<br />life," Pawn America founder Brad Rixmann
<br />said. "We have in the last year seen more
<br />higher-dollar items come into our stores."
<br />The pawn business is booming these days,
<br />industry analysts say and profits show.
<br />Area brokers say they've seen more activity
<br />from people hocking goods for quick loans,
<br />seliingjewelry to cash in on the high price of
<br />gold and shopping for bargains.
<br />At Texas-based Cash America, which calls
<br />itself the "largest operator of pawnshops in
<br />the world," third-quarter 2007 results for its
<br />pawn and related businesses show a 59
<br />percent gain in net profits from the same
<br />period a year earlier.
<br />"You can look at all the publicly traded
<br />companies and their businesses obviously
<br />have benefited from this current economic
<br />cycle," said Liz Pierce, a senior research
<br />analyst at Roth Capital Partners.
<br />Enhanced image
<br />Some local brokers also attribute increased
<br />business to a cleaner image.
<br />Pawn America, for instance, has gussied up
<br />some of its retail stores, giving them the feel
<br />of a Best Buy store on the retail side and a
<br />bank on the loan side. They also market
<br />heavily. The company jingle, "Pawn America
<br />is right for you," is a staple on N and radio.
<br />In the new Burnsville store, warm-toned
<br />wood graces the walls and soft lighting
<br />illuminates jewelry counters. Flat-screen
<br />televisions advertise the chain's services
<br />and tout its community involvement.
<br />Dan Colins of Lakeville waited in line
<br />recently after he was laid off from his air-
<br />conditioning and heating job. Using a
<br />surround-sound speaker system as his
<br />collateral, he was scrounging up cash and
<br />credit to buy a furnace and install it for a job
<br />he was doing privately.
<br />"You've got to scramble nowadays," he said.
<br />He got a$100 loan for the speakers, he
<br />said, and will have to pay $12.50 in interest
<br />and fees after just a couple of days -- an
<br />amount he reasoned was about equivalent
<br />to a family trip to Starbucks. "If you do it
<br />smart, iYs not a bad deal."
<br />If he doesn't pay or doesn't extend his loan,
<br />he knows the surround sound set could end
<br />up for sale.
<br />In the same store, a suburban mom who
<br />didn't want her named used paid off her loan
<br />and got her laptop back. She has pawned it
<br />several times in the past few months, she
<br />said, because the high prices of gas and
<br />food were breaking into her tight budget.
<br />"It's helped me out in a pinch," she said. And
<br />she figures iYs better than the potential of
<br />ruining her credit by putting things on
<br />plastic. "This way, if I don't have the money,
<br />then I guess I just lose whatever it was I
<br />brought."
<br />Pawn America sales associate Damion Frelix
<br />said when he works behind the counter to
<br />make loans or buy people's goods, they
<br />sometimes volunteer their story of why
<br />they're there.
<br />There are always surprises, such as
<br />unexpected medical bills and emergency car
<br />repairs, he said. But gas prices have
<br />increasingly entered into the conversation,
<br />he said. "And lately, it's 'I got laid off,"' he
<br />said.
<br />Not all customers, though, are out-of-luck
<br />workers.
<br />Pawn America's Rixmann said high-end
<br />loans sometimes go to business owners
<br />trying to make payroll or waiting on a bill to
<br />be paid. It will hold them over until they get a
<br />payment from somebody else.
<br />They can't go to their bank and bring in their
<br />jewelry collection to quickly secure a
<br />$10,000 loan, he said.
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