Get a Great Buy at William S. Rich and Son
Pawnbrokers in most states are licensed as is the case in New Jersey where all locations must be licensed through the Department of Banking and Insurance. Further, pawnbrokers must operate in accordance with statutes passed by the legislature and signed by the governor referred to as the Pawn Broking Statutes. Included in that law are rules governing all the operations of a pawnbroker including interest rate caps, reporting and record keeping requirements, customer notification rules, advertising rules etc. In addition to the statutes, the banking commissioner issues regulations that further explain and expand on the rules set out by the legislature. To determine compliance with these rules the banking department conducts random examinations of all licensees at various times during the year and issues findings and recommendations as a result. Pawnbrokers in New Jersey are viewed much like any other financial institution in the eyes of the State Department of Banking. Currently, the pawn broking statutes allow for an interest rate of 3.7% per month with small service charges that bring the APR to just above 44.4%. The term of the loans vary with the individual pawnbroker, WSR has a set term of 6 months on all of its loans. Given the large volume of loans WSR makes and the company's desire to continue to build its customer base, loans are usually held for a ten month period before sale. At any time prior to the sale customers can handle their transactions in one of two ways. The first Option available is the payment of interest only, which entails the customer paying the amount of interest accrued on the loan and thereby extending the term another six months. The second option allows for the customer to pay both the accrued interest and the loan principal at which time his merchandise will be returned to him. The customer is free to continue to pay interest on their pledge for as long as they desire, there is no final term at any point. Anytime after the required notification has been made and the sale date has passed without payment the pawnbroker can initiate sale of the item in accordance with statute. If all conditions are satisfied the item can then be sold on a retail or wholesale basis. In all of the WSR locations there are facilities for the retail sale of merchandise obtained from the pawn broking operations. WSR management has also secured many avenues of wholesale sale for merchandise not to be retailed. Additionally, the redemption rate for loans made at WSR has run at about 90%, meaning at the very least interest is paid on that percentage of items pledged. |
The business of a pawnbroker is to provide smaller cash loans to customers using personal items as collateral. For the most part pawnbrokers secure jewelry including but not limited to diamonds, gold, watches and precious stones as collateral, for cash loans that average about $150. Pawnbrokers are also known to make loans with customers using items such as televisions, cameras, musical instruments as collateral. WSR loans against all of the above at the Newark location but confines collateral to jewelry items at its other locations due to space and economic issues. In all cases the collateral items are physically
secured by the pawnbroker so issues of collection on the loan are not a factor at any point.