"How much for a Pentium 133 with a Canon printer?" asks a thin man with a five o'clock shadow and long hair.
"It's too slow," says Stacey, owner of 5 Star Pawnbrokers in London, Ont. Stacey, who declines to give his surname, doesn't buy outdated items, especially when it comes to electronics.
Unlike what you might see on TV, pawnshops don't buy everything that people bring in
-- they're actually quite picky. In fact, there are many rules for pawnshops that might surprise you: Stolen goods are forbidden, there's no business with anyone under 18 and you must have proper ID.
Stacey's well-lit store, with items neatly stacked on clean shelves, isn't the seedy locale most people think of when they think of pawnshops. That's because shop owners and associations across Canada are working hard to change their image, and that means changing the way they do business.
For customers, that translates into great deals and a reputable place to borrow a few bucks before payday.Shops on the rise
Stacey has strong beliefs on why shops are becoming more popular.
"Twenty five percent of the population is under banked," he says. "Many people live day to day, pay cheque to pay cheque, and don't have the necessities of life available to them, and you can't get $20 from the bank."
Banks would lose money left, right and centre if they issued $20 or even $1,000 loans. That's where pawnshops come in.
In the movie Trading Places, Dan Aykroyd, disheveled and homeless, begs a pawnshop owner for a few more bucks for his watch. Erase that image from your mind; 90 percent of pawnshops dispense loans on items rather than buying them outright.
"Over a 30-day period, I have maybe 10 to 15 items to buy, but hundreds of loans," says Ken Roath, owner of Roath's Pawnshop in Surrey, BC.
It works this way: A customer brings in an item, receives a loan and signs a contract that lasts between 30 and 90 days. The customer can retrieve his goods at any time, but will be charged an interest fee, ranging between five and 10 percent, and a small processing fee, which varies from store to store.
If the loan defaults after a designated grace period, the article is put up for sale. But shop owners say 80 percent of the time, customers reclaim their items within a few months.
A 10 percent interest rate might seem high, but overhead costs for pawnshops are astronomical. After 35 years of charging only five percent, Roath was forced to raise it to 7.5 percent this year. "We need the square footage of a warehouse. I have over 40,000 square feet of shelf space alone."
Today, shop owners have a more sophisticated method of appraising the worth of items than they used to: the Internet. Within minutes, owners can look up items on manufacturers' Web sites or eBay.
"We have no guidelines, but you have to know the market, and the Internet has been a valuable source," says George Frescura, owner of Golden Pawn in London, Ont. "I can find information on a watch within five minutes."
The price also depends on the condition of the item, and what is available on the market. "If there are billions of the same item at secondhand stores, you can't pay big dollars for it because the resale value is much lower," says Frescura.
If a customer only needs $30, he also has the option of borrowing only what he needs and not the total appraised value of his item.
On the buying side of business, great deals are also attracting business, says Ken Keane, owner of Centretown Pawnshop in London: "We have good deals on electronics, and we show them (the customer) how it works while they're here. There's also a 30-day warranty, and the jewellery is a steal, if we can use that word."
All jewellery is sold for one-third of its value, plus a $40 appraisal fee.
It's all legal
Customers are often shocked to learn that each item brought into a pawnshop is reported to the police. Each province and territory has legislation in place that requires shop owners to send police a daily report on the items they've received, complete with serial numbers and descriptions.
In business for more than 37 years, Roath says it's rare to get stolen goods. He says his employees are trained sleuths. "We ask lots of questions, and if the person doesn't know how to turn on the camera [they've brought in], it's stolen," he says.
On the rare occasion police find stolen property in a pawnshop, the owner must forfeit the item and is not reimbursed, so it pays for them to be cautious.
A valuable resource
As the president of Ontario's pawnshop association, Keane is eager to shed the dingy image associated with his trade. "There is a large misconception with who we are and what we do because we can't relate to a clothing store or bedding store. We're our own business."
And the clientele isn't what you'd think. "We don't get many people on welfare, we deal with reasonably well-paid people that can't budget," says Roath. These are often double-income families who don't put away rainy day money for things like car repairs.
For Frescura at Golden Pawn, young people are his hottest market, both as buyers and those needing loans. "There's a lack of jobs for certain age groups. And kids today don't find it unappealing to come into a pawnshop. At one time there was a bit of a stigma attached to pawnshops, but they overlook that."
Stacey admits it's a sad reality that people need his help, but at the same time, he says he provides a valuable service. "They can't get money anywhere else, at least that's the impression I get from them."
Most shops in Canada dispense loans between $20 and $100. And to someone who needs a few groceries before payday, that can be a lifesaver.
Melanie Chambers is a writer in London, Ont.