Prices offered by different shops can vary wildly. For example, offers on a single diamond ring Birnholtz shopped around to different storefronts in the Detroit area ranged from $65 to $1,060.
– Survey of pawnshop users shows where banks fail low-income Americans:
Pawnshops don’t exactly have the best of reputations. Their business model – offering people short-term loans using personal items as collateral – has consistently drawn complaints suggesting the industry preys upon the needy. In 2012, when a national chain wanted to open a pawnshop in a long-vacant lot in Chicago’s predominantly African American 18th Ward, for example, community members erupted up in strident opposition.
If there’s such a negative public perception of pawnshops why do some 30 million Americans use them every year?
The reason, insists PawnGuru co-founder Jordan Birnholtz, is pawnshops have become a refuge of last resort for millions of low-income Americans systematically underserved by traditional, mainstream financial institutions. People deciding to use pawnshops, he argues, is an entirely rational choice exposing the fundamental failure of the U.S. banking system to meet the needs of many poor people.
Launched in 2014, PawnGuru is an online service intended to give people pawning their personal items increased leverage in the process. Someone can log in to PawnGuru, post the item he or she wants to pawn and receive bids from multiple pawnshops in their area.
Prices offered by different shops can vary wildly. For example, offers on a single diamond ring Birnholtz shopped around to different storefronts in the Detroit area ranged from $65 to $1,060.
In its two years of existence, PawnGuru has built up a substantial email list from the more than 160,000 people who have used its site. Birnholtz recently became interested in seeing if he could gain better insight into why people used pawnshops in the first place, so he sent out a survey to his email list asking sellers about their financial behavior and experience with the mainstream banking system.
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