For such a simple idea that people have been using for thousands of years, pawning seems baffling to many people.

Just the other day here at Kamaaina Loan, we were discussing possible regulatory changes — perhaps coming from the national government — that would affect us, so we pulled down “Black’s Law Dictionary” to refresh everybody about the legal description of “pawn loans.”

It uses words like “bailments” and is not that user-friendly, so this is how I — as a professional writer — boiled it down:

A pawn transaction is a short-term cash loan secured by portable collateral.

The devil, of course, is in the details. We found an article in the Dayton Daily News headlined

Before you hock an item to a pawn shop

It seems to be a Better Business Bureau canned article but none the worse for that. With one exception, we found the advice offered to customers pretty good.

The exception?

• Know the value of items. If you don’t know the value, shop around and/or consider getting an appraisal.

The first part of that is OK. But an “appraisal” is impractical in most cases.

The BBB quotes the National Pawnbrokers Association that the average pawn loan is around $150, and that is close to the average at Kamaaina Loan And Cash For Gold.

Now we also offer appraisals, and ours have been accepted by every court in the state. The difficulty is that the minimum charge for a real appraisal is about $150 — and it can be a lot more for a big task like helping a conservator prepare a report for probating an estate.

Obviously, it doesn’t make sense to pay $150 to learn the value of something you are going to use to get a loan for $150.

So, what to do?

With gold and silver, you can look up the New York price on kitco.com. Then with some simple arithmetic you can determine how much gold is in your wedding band. Example: an 18 karat band is 75% gold, so if it weighs 4 grams it has 3 grams of gold in it.

You know the New York price per gram. The pawnbroker is going to offer you a fraction of that, because if he has to sell the ring there are lots of expenses involved: store overhead, insurance, shipping, assay etc.

That includes his risk that the N.Y. price will go down between the time he gives you cash and the time — at least two months later under the laws we operate under — that he sells it.

So there is room for borrower and lender to make assumptions. Different pawnbrokers will come to different conclusion about what that ring is worth. At Kamaaina Loan, we like to say, see us last. You’ll find out we make the highest offer.

(As a practical matter, the pawnshops on our island are separated by about $5 worth of gas and 30 to 45 minutes of driving time, so you cannot really afford to shop around too much for a $150 loan. Pick a pawnbroker you like and stick with him. Pick us.)

With other items,. the customer can do the same thing we do: look it up on the Internet.There are specialized sites. For example, for golf clubs, the Professional Golfers Association maintains a free site, valueguide.pga.com. This is supposed to be based on transactions across the country, but it may not be entirely reliable for local preferences, and condition counts.

There are sites for particular brands of guitars etc., but for the majority of goods eBay sets the floor. You the borrower can look up prices on eBay as well as we can. Remember to look at “completed auctions” to get the actual prices achieved.

One thing we liked about that BBB article was its report about inquiries and complaints. In 2015, the BBB received over 65,000 inquiries about pawnbrokers, but only 300 were complaints.

We bet they got more complaints about the cheese in cheeseburgers.

(Kamaaina Loan is a member of the Hawaii BBB.)

#maui #mauipawn #mauiretail