How your local pawn shop works

By Rick Carpenter -

Dwayne Martin, owner of Action Pawn, stands in a vault with hundreds of firearms that are collateral for loans.

You shouldn’t call the television show “Pawn Stars” a “reality” show, say local pawn shop owners.

In fact, the dickering they do over the price or value of something isn’t as negotiable as they imply.

And while many people think the majority of their businesses focus on buying and selling merchandise, in reality they are more like the banking industry than a retail store.

Dwayne Martin, owner of Action Pawn at 315 S. Main, said 95 percent of his business involves loaning people money by holding their collateral, or a pawn, for that loan. His numerous safes and vaults contain that collateral until they can repay the short-term loans.

Martin said most people seeking pawns are either “unbanked or underbanked,” meaning they either don’t have money in a bank or don’t have enough money in a bank to qualify for a loan. They also might just need a short-term loan that doesn’t involve going through a credit check or legal process.

However, Martin said, if someone pawns a firearm, they go through a background check when he or she submits the pawn and when he or she pays off the loan and receives the firearm back.

The federal and state governments regulate the pawn industry and conduct annual audits to verify information supplied by the pawn shops.

According to the State of Oklahoma Department of Consumer Credit, which governs the pawn industry, in 2015 there were 1.3 million pawns financing $155 million and generating $35 million in pawn charges. The average amount financed was $117 and the average finance charge was $26.51.

Pawn shops can legally charge a 20 percent interest a month in pawns for as much as $150. If the pawn isn’t repaid within 30 days, the rate continues at $1 a day until it is paid. After 60 days, if the loan hasn’t been repaid, the pawn shop may sell the collateral to recover his or her loan payment.

Loans of more than $150 have a decreasing scale of loan percentages pawn shops can charge, Martin said. The rates slide to 3 percent a month for loans between $1,000 and $25,000, the highest amount for which someone can pawn something.

And because people know what they can get for an pawned item, they often come back for more.

“I would say 75 percent of my pawn transactions are not only by repeat customers, but repeat collateral,” Martin said.

Martin stumbled into the business while building a construction and rental property business. One of his customers wanted to sell him a building that contained a pawn shop that was run by the owner’s son. Part of the negotiations gave Martin temporary control over the pawn shop. Martin saw potential in the son’s business and bought the business from him. It took three years to make it profitable but his vision became a reality.

Martin said many pawn shops specialize in making loans for items they specialize in. While he specializes in firearms, he said Red River Pawn down the street on Main Street, emphasizes antiques and old signs.

Brent Ray Romines, owner of Red River Pawn, said he likes to collect antiques and memorabilia, but he agrees with Martin saying the majority of his loans are for jewelry or firearms.

And do they get business during the holidays? Romines said other than taking out temporary loans, most people who come into his shop are just curious. He said some think they are seedy places and are often surprised by the unique products they sell.

All items displayed in the stores are for sale; they are not pawn items, Martin said. So the one true part of “Pawn Stars” is that they sometimes buy items people bring in, but they buy them to resale or, in Martin and Romines’ cases, they want to keep.

Dwayne Martin, owner of Action Pawn, stands in a vault with hundreds of firearms that are collateral for loans. Martin, owner of Action Pawn, stands in a vault with hundreds of firearms that are collateral for loans.

By Rick Carpenter

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