A pawnbroker is an individual or business entity that offers monetary loans in exchange for an item of value to the given pawn broker. The word "pawn" is derived from the
Latin"pignus", for pledge, and the items having been "pawned" to the broker are themselves called "pledges" or "pawns", or simply the collateral.
The pawning process begins when a customer will bring in an item, whereby the pawnbroker assess the item for its condition and salability, as well as the amount the customer may need for the item. If the pawnbroker is interested in the item, he will offer the customer an amount for it. The customer can either sell the item outright, or offer the item as collateral on a loan.
If an item is pawned for a loan, within a certain contractual period of time the pawner of an item may purchase it back for the amount of the loan plus some agreed upon amount for interest. The amount of time, and rate of interest, is governed by state law and the pawnbroker's policies. If the loan is not paid (or extended, if applicable) within the time period, the customer forfeits title of the item to the pawnbroker. Unlike other lenders, though, the pawnbroker does not report the defaulted loan on the customer's credit report – since the pawnbroker has title to (and physical possession of) the item; the pawnbroker may recoup the loan value through outright sale of the item at his place of business, called a pawnshop or pawn shop. The pawn shop also sells items that have been sold outright by customers to the pawnbroker.
However, the pawnbroker assumes the risk that an item purchased was actually stolen property. In the community's interest in not allowing a legitimate businessman to act as a fence, laws to protect both the pawnbroker and the community at large exist in some jurisdictions. These laws often require the pawnbroker to establish positive identification of the seller through photo identification (such as a drivers license or government-issued
identity document), as well as a holding period placed on an item purchased by a pawnbroker (to allow for local law enforcement authorities to track down stolen items).
Common items pawned by customers include
jewelry, electronics(this includes hardware such as televisions and computers and software such as video games, as well as movies), musical instruments, firearms, and tools(both hand tools and power tools). Goldis a very popular item which is almost always purchased; even if the source (such as a piece of broken jewelry) has little value, the gold can still be sold in bulk to a bullion dealer or smelterfor the value of the gold content.
In the west, pawnbroking existed in the Ancient Greek and Roman Empires. Most contemporary Western law on the subject is derived from the Roman jurisprudence. As the empire spread its culture, pawnbroking went with it. Likewise, in the East, the business model existed in China 3000 years agoCite web |url=http://www.roaths.com/pawnbroking.htm |publisher=Roath's Pawn Shop |title=History of Pawnbroking |accessdate=2008-08-05] no different than today, through the ages strictly regulated by Imperial or other authorities.
In spite of early
Roman Catholic Churchprohibitions against charging intereston loans, there is some evidence that the Franciscanswere permitted to begin the practice as an aid to the poor.Fact|date=February 2007
In England, the pawnshop came in with
William the Conqueror, with an Italian name, Lombard. In 1338, Edward III pawned his jewels to the Lombards to raise money for his war with France. King Henry V did much the same in 1415.
The Lombards were not a popular class and
Henry VII Tudorharried them a good deal. In the very first year of James I Stuartan "Act against Brokers" was passed and remained on the statute-book until Queen Victoriahad been on the throne thirty-five years. It was aimed at the many counterfeit brokers in London. This type of broker was evidently regarded as a fence. It is also known that Queen Isabella of Spain pawned her jewelry in order to send Christopher Columbus out to what he believed was western India.
In the United Kingdom, typical
high streetpawn interest rates vary between 5% (79.59% AER [cite web | url =http://www.stoozing.com/mon2yr.htm | title =Interest Rate Converter | publisher=Stoozing.com] ) to 12% (289.6% AER) gross "per month" and the average annual equivalent rateis 85%. [cite web | url = http://www.thisismoney.co.uk/news/article.html?in_article_id=394386&in_page_id=5 | title =Pawn Shop Rip-off | accessdate = 2007-01-02 |date= 2004-11-12| work =This is Money - Associated Newspapers Ltd|last=Walne |first=Toby]
The pawnbroker in the
United Statesis generally subject to considerable legal restriction.Fact|date=February 2007 Each state has its own regulations regarding pawnbrokers, generally regulating the amount of interest that is allowed to be charged on a collateral loan. In Massachusetts, a 2007 Boston Globeinvestigation suggested 10% monthly interest was not uncommon. [cite web|url=http://www.boston.com/news/local/articles/2007/04/30/state_fails_to_curb_usurious_pawnshop_rates/?page=1
title=State fails to curb usurious pawnshop rates: Little oversight as poor bear brunt |first=Donna |last=Roberson |publisher=Boston Globe |date=2007-04-30] In the state of New York, interest at pawnshops is limited to 4% per month. [cite web |url=http://www.nytimes.com/2007/09/14/nyregion/14pawn.html |title=Cash to Get By Is Still Pawnshop’s Stock in Trade |publisher=
New York Times|date=September 14, 2007 |accessdate=2007-09-14 |first=Manny |last=Fernandez ]
The pawnbroker's symbol is three spheres suspended from a bar. The three sphere symbol is attributed to the
MediciFamily of Florence, Italy, owing to its symbolic meaning of Lombard. This refers to the Italian province of Lombardy, where pawn shop banking originated under the name of Lombard banking. The three golden spheres were originally the symbol which medieval Lombard merchants hung in front of their houses, and not the arms of the Medici family. It has been conjectured that the golden spheres were originally three flat yellow effigies of byzants, or gold coins, laid heraldically upon a sable field, but that they were converted into spheres to better attract attention.
Most European towns called the pawn shop the "Lombard". The House of Lombard was a banking family in
medieval London, England. According to legend, a Medici employed by Charles the Greatslew a giant using three bags of rocks. The three ball symbol became the family crest. Since the Medicis were so successful in the financial, banking, and moneylending industries, other families also adopted the symbol. Throughout the Middle Ages, coats of arms bore three balls, orbs, plates, discs, coins and more as symbols of monetary success. Pawnbrokers (and their detractors) joke that the three balls mean "Two to one, you won't get your stuff back". Saint Nicholasis the patron saintof pawnbrokers. The symbol has also been attributed to the story of Nicholas and the three bags of gold.
Pawn shops in Asia
batholding a coin.]
Hong Kongthe practice follows the Chinese tradition, and the counter of the shop is typically higher than the average person for security. A customer can only hold up his hand to offer belongings and there is a wooden screen between the door and the counter for customers' privacy. The symbol of a pawn shop in Hong Kong is a bat(the animal) holding a coin(zh-t|蝠鼠吊金錢, Cantonese: "fūk syú diu gām chín"). The bat signifies fortune and the coin signifies benefits.
Japan, the usual symbol for a pawn shop is a circled digit seven, as "shichi", the Japanese word for seven, sounds similar to the word for "pawn" ( _ja. 質).
India, the Marwari Jaincommunity pioneered the pawnbroking business, but today others are involved; the work is done by many agents called "saudagar". Instead of working from a shop, they go to needy people's homes and motivate them to become involved in the business. Pawn shops are often run as part of jewelry store. Gold, silver, and diamonds are frequently accepted as collateral.
Pawnbroking is also a traditional trade in
Pawnbroker as charity
A pawnbroker can also be a charity. The Monte de Piedad movement began in
Perugia, Italyin 1450 with the Orden de Menores Observantes de San Francisco. It had the aim of providing financial assistance to people in the form of no-interest loans, secured with pawned items. Instead of interest, borrowers were urged to make donations to the Church. It spread first through Italy then in other parts of Europe. The first Monte de Piedad organization in Spainwas founded in Madrid, and from there the idea was transferred to New Spainby Pedro Romero de Terreros, the Count of Santa Maria de Regla cite web |author= Leon Teutli Ficachi |url= http://www.anahuac.mx/clares/archivos/nacionalmontedepiedad.pdf |title= Nacional Monte de Piedad |accessdate= 2008-10-01 ] and Knight of Calatrava.The Nacional Monte de Piedadis a charitable institution and pawn shop whose main office is located just off the Zocalo, or main plaza of Mexico City. It was established between 1774 and 1777 by Pedro Romero de Terrerosas part of a movement to provide interest-free or low-interest loans to the poor. It was recognized as a national charity in 1927 by the Mexican government. cite encyclopedia |last=Alvarez |first=Jose Rogelio |author= |authorlink= |coauthors= |editor= |encyclopedia=Enciclopedia de Mexico |title=Nacional Piedad de Monte |url= |accessdate= |accessyear= |accessmonth= |edition= |date= |year=2000 |month= |publisher=Encyclopedia Brittanica |volume=10 |location=Mexico City |id= |isbn=1-56409-034-5 |doi= |pages=5699-5701 |quote= ] Today it is a fast-growing institution with over 152 branches all over Mexicoand with plans to open a branch in every Mexican city. cite news |first=Notimex |last= |title=Dispone Monte de Piedad de 905 mdp para préstamos |url= http://www.elsiglodetorreon.com.mx/noticia/321965.dispone-monte-de-piedad-de-905-mdp-para-prest.html|publisher=El siglo de Torreon |location=Torreon |id= |pages= |page= |date= |accessdate=2008-10-01 |language=Spanish ]
Cash America, a large United Stateschain of pawnshops
EZCorp, a growing chain of pawnshops in the United Statesand Mexico
* [http://www.pawnshoplistings.com Online Directory for US Pawn Shops]
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Look at other dictionaries:
pawnbroker — pawn‧bro‧ker [ˈpɔːnˌbrəʊkə ǁ ˈpɒːnˌbroʊkər] noun [countable] someone whose business is to lend people money in exchange for valuable objects: • Pawnbrokers are now allowed to charge any interest rate on loans above $2,500. * * * pawnbroker UK US… … Financial and business terms
pawnbroker — pawn·bro·ker / pȯn ˌbrō kər/ n: a person who lends money on the security of personal or movable property pledged in his or her keeping or who buys personal property and gives the seller an opportunity to buy back the property Merriam Webster’s… … Law dictionary
Pawnbroker — Pawn bro ker, n. One who makes a business of lending money on the security of personal property pledged or deposited in his keeping. [1913 Webster] … The Collaborative International Dictionary of English
pawnbroker — (n.) 1680s, from PAWN (Cf. pawn) (n.1) + BROKER (Cf. broker) (n.) … Etymology dictionary
pawnbroker — ► NOUN ▪ a person licensed to lend money at interest on the security of an article deposited with him or her … English terms dictionary
pawnbroker — [pôn′ brōk΄ər] n. [ PAWN1 + BROKER] a person licensed to lend money at a legally specified rate of interest on articles of personal property left as security pawnbroking n … English World dictionary
pawnbroker — UK [ˈpɔːnˌbrəʊkə(r)] / US [ˈpɔnˌbroʊkər] noun [countable] Word forms pawnbroker : singular pawnbroker plural pawnbrokers someone whose job is to lend money to people in exchange for a valuable object that they can sell if the person does not… … English dictionary
pawnbroker — [[t]pɔ͟ːnbroʊkə(r)[/t]] pawnbrokers N COUNT A pawnbroker is a person who lends people money. People give the pawnbroker something they own, which can be sold if they do not pay back the money before a certain time … English dictionary
pawnbroker — pawn|bro|ker [ˈpo:nˌbrəukə US ˈpo:nˌbroukər] n someone whose business is to lend people money in exchange for valuable objects. If the money is not paid back, the pawnbroker can sell the object … Dictionary of contemporary English
pawnbroker — A person who lends money against the security of valuable goods used as collateral. Borrowers can reclaim their goods by repaying the loan and interest within a stated period. However, if the borrower defaults the pawnbroker is free to sell the… … Big dictionary of business and management