Remember that bank executive who worried he wouldn’t be able to afford to send his children to an exclusive private school and afford his family’s summer rental home in Connecticut? Maybe he should consider a high-interest loan from one of these pawn stars for the wealthy.
“A lot of people like to call them the 1% but we call them our client base,” one luxury pawn broker tells CNN about his business. “These are people who are well-off, who have extraordinary toys, but unfortunately are not liquid enough to keep them.”
So why would people choose to hand over their $90,000 Rolex, or their coin collection, or their Torah if they are already wealthy?
The one broker explains that owning a Ferrari or having a big house doesn’t necessarily equate to a credit score over 700.
So for the convenience of not having to go through a credit check or the long application process (or having their credit scores dinged any further if they default), borrowers at the two brokers CNN spoke to are expected to pay 4% interest per month. That’s 48% APR, the maximum allowable by New York state. People in other states could face upward of 25% interest each month.
Also, borrowers will not be getting the full value of the item the take out the loan against. For example, CNN talked to one man who couldn’t get a small business loan to open a new seafood restaurant, so he took out a $30,000 loan against a necklace that had been appraised at $54,000.
“We are nothing more than your neighborhood branch of Chase,” explained one broker. “We’re just easier to get a loan from.”
And for a man who makes a living on charging a sky-high interest rate, the broker has some surprisingly sensible advice for potential clients: “Just borrow what you need and what you can afford to pay back.”
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I won’t feel bad if a wealthy person defaults and loses their property. I mean it would be nice to have a summer rental home in Connecticut but it is not a necessity. I once heard about a super wealthy person complaining that he could no longer afford to take a helicopter to the golf course anymore, he had to settle for a chauffeur driven limousine instead.
First World Problems.
not first world problems. Super rich people problem.
Bingo.
To be fair, if I had my own helicopter, I’d find an excuse to use it every damned day too…
If you were rich enough to afford your own helicopter you would have probably gotten that way by knowing how much $/hour it costs to run those things.
Too bad you can’t land at a Wal Mart so all the unwashed masses can
bask in your magnificence. I heard they have Canadian bacon on sale. lol
“So why would people choose to hand over their $90,000 Rolex, or their coin collection, or their *Torah* if they are already wealthy?”
…Did Chris just make a Jewish money joke?
In his defense, the video at the bottom of the article has a picture of a fucking Torah on it.
A Fucking Torah? Is that like some kind of Hebrew Kama Sutra? I wonder if they have that at Borders…
I feel a sudden interest in Judaism coming on…
Hebrew Kama Sutra…where does one sign up for this?
Wow, should have watched the video… Sorry Chris! *facepalm*
There, there…we all say really stupid shit sometimes…your facepalm makes everything okay.
*pat pat*
I can’t tell if what he wrote was just a Jewish joke or anti-semitic…
Apparently I was wrong to make this comment. Oops.
You’re part of the problem with society today, assuming everything and everyone is racist.
And yet you feel free to assume that he’s part of the problem, for some reason.
A lot of people live the rich lifestyle without being rich. I know of a couple that every couple of years get new cars and live in a big, nice house but are deep, very deep in debt.
I recommend the book “The Millionaire Next Door”, it was eye opening for me.
I’d prefer to look like I’m dirt poor but have a million dollars in the bank. So far, I’ve achieved the first half.
Haha, me too. That’s a great book, it definitely changed the way I looked at spending.
Well, clearly they don’t know about the E special- Pawn 90210 (which I saw on a plane)
http://tvbythenumbers.zap2it.com/2011/08/26/e-entertainment-special-pawn-90210-premieres-wednesday-september-7-at-10p-et/101531/
Does the 1% really need a $30k loan?
4% per month is not 48% APR. It is ~60.1% APR. To go from a monthly percentage to an APR, you take 1 (for simplicity) and multiply it by the sum of 1 and the interest rate raised to 12 (the number of months in a year). The formula looks like 1*(1 + 0.04)^12 = 1.601032
What if it’s charged on the base loan monthly but compounded annually?
The APR (annual percentage rate) is the nominal interest rate. The APY (annual percentage yield) is the real interest rate. Thus the APR would be 0.04 * 12 = 48%, while the APY would be (1.04)^12 – 1 = 60.1%.
Of course that is assuming that the interest is compounded monthly. For short term loans like pawns, simple interest usually rules the day, and so no compounding would occur.
Nothing like a little 1% class warfare to pump up the audience. Now we have class warfare rhetoric staining the consumerist lexicon and narrative, disgusting. haters gonna hate.
“Haters gonna hate”? What are you, 15?
It’s only “class warfare” when the unwashed masses speak up.
Yup. You can’t argue with the facts. CEO makes 315X more than his average worker today. It was like 3x 50 years ago. Do CEOs do 100X more work than they did 50 years ago? Hell no. The middle class makes less now than it did 10 years ago. The number of poor is growing. The wealth of the wealthiest Americans has grown 300% in recent history. I mean…you don’t need to be an economist to see what is happening, and perhaps those of us working our asses off so the rich can get richer are beginning to question the system.
Back when I was part of the 1%, we spent 110% of what came in…. great food, wonderful wine, etc. But, cash was rough. Money was a constant stress factor. We were money idiots.
Amazingly, I find being ‘poor’ much easier. I don’t have to impress anyone or attend any functions. No one cares what I wear at Walmart. When I’m feeling rich, I go across town and buy some Two Buck Chuck (which isn’t any more.) Some of us just don’t do well being rich. I’m much happier being poor.
that’s the one thing I won’t tolerate if I ever become rich. I swear to myself I will not grow obsessed with impressing people.
It’s a damn waste of time and people are douchebags for doing it.
Also swore to myself I would keep it as low key as possible. Don’t need a lot of sudden friends and “relatives” who suddenly care coming out of the woodwork.
I watched me some PAWN STARS the other day. Pausing my HD DVR, I could easily read the rate card at the counter. It said, “13% per month plus a $5 service fee.”
HOLY (*&^%$@*)*&#^%#*(
I don’t watch the show that often yet I’ve never seen a single customer pawn their item.
Huh, and here I thought they just threw it out and bought a new one /sarc
seriously though, I hardly feel bad for people who spend themselves into debt like that.
I feel even less for people that consider having to drive themselves for a change, or as a stated example, NOT use a helicopter as “being on hard times”
If they wear a Rolex like the one in the picture, they are probably Nouveau Riche and not truly wealthy.
It’s not the 1% who are doing this — it’s the 11% or the 16%. Not every crazy/annoying/stupid thing done by rich people is done by the 1%. There are plenty of rich people at 18% or at 10% who do stupid stuff too.
Put people won’t react to a headline unless it says “the 1%”.
Another article on the divisive class wars, how stimulating.
I”m not surprised that the “1%” has to pawn their junk in order to keep up with the joneses. Mostly because they aren’t really a part of the 1% they just think they are and obviously lived beyond their means.
On a side note the picture of the Rolex reminded me of a time I was shopping on Michigan ave with my dad and I went into a jeweler who carries Rolex I wanted to ogle them. The sales assistant said the best line ever, he told me that a Rolex is not only a statement piece to show people you have made it but it’s also an investment. I didn’t hold back my laughter one bit surprisingly my dad did. The look on the SA’s face was priceless apparently that line must work a lot for him but not this time. I told him I strongly disagreed and a watch is NOT an investment.
A Patek or a Vacheron could probably be considered as an investment but at a somewhat low return. But for the most part I agree with you.
I’m sorry, but if you have a “big house or ferrari” there is no excuse for having bad credit.
Many financial holdings companies will allow you to borrow against your assumed worth in stocks for extremely low apr. And if you bought a big house and nice car before starting a stock portfolio, then you suck at money and life.
So more power to these pawn shops, at least they aren’t taking advantage of people that have no other options.