Pawnshops Lure Suburbanites, To Their Credit It’s A Growing Industry As The Spending Generation Looks For Alternative Sources Of Credit

When the plastic’s maxed out and the ATM isn’t on speaking terms, there’s always the pawnshop.

A growing number of suburbanites are turning to pawnshops as a new source of credit. To encourage that, new suburban pawnbrokers are doing their best to overcome the old image of seedy Skid Road storefronts with bars on the windows and dubious merchandise on the shelves.

“People are wanting nicer, cleaner environments. You should feel as comfortable coming in here as you do at Nordstrom,” said Brian Lurie, who opened the Yuppie Pawn Shop in downtown Kirkland five years ago. Last year, he moved to a more visible location in a strip mall beside Interstate 405.

Pawnshops are a growing industry. Nationally, the number has roughly doubled from 6,900 shops in 1988 to between 12,000 and 14,000 today, the National Pawnbrokers Association says.

National chains have sprung up because of the potential profits from high interest rates - up to 25 percent a month in some Southern states. So far, Washington’s stricter limits on interest rates have deterred chains such as Cash America, Ezcorp, First Cash and U.S. Pawn from opening shops here.

In Washington, the maximum interest rate ranges from 3 percent to 20 percent a month, plus a one-time setup fee of 2 percent to 40 percent, depending on the loan amount. The loan expires after three months, unless extended by the pawnbroker.

Money also is made by selling items left as collateral for the loans if the borrower doesn’t reclaim the pawned item.

“We are a cash machine to a lot of people who, for whatever reason, don’t have a relationship with a bank,” said Rob Robinson, a former Key Bank vice president who operates the Western Cash pawnshop in Bellevue.

Plenty of local entrepreneurs are setting up shop.

Woodinville got its first pawnbroker nearly three years ago when Doug Elburn and Nick Barnes opened the Baby Boomer Pawn Shop in a strip mall. Now it has competition from the Woodinville Pawn Shop across the street.

The region’s biggest chain of pawnshops, Bellevue-based Pawn X-Change, has grown from one store in 1993 to 12 stores between Olympia and Everett. Its downtown Bellevue store, with its open aisles and attractive displays of merchandise, has the feel of a well-run retail outlet.

Bellevue police estimate the number of transactions at Bellevue’s three pawnshops has doubled over the past two years.

Since the Seattle City Council loosened zoning restrictions on pawnbrokers several years ago, shops have spread from downtown to throughout the city. The number of pawn transactions reported annually to Seattle police has doubled from 70,000 to 150,000 over the past three years.

Pawnbrokers must report all loans and purchases so police can verify they aren’t accepting stolen goods. Seattle police recovered stolen merchandise in 300 cases last year.

“The business still has a pretty bad stigma. We’re working hard on changing that,” said Pawn X-Change President Brad Shane. “I want it to be a place where my wife, if she didn’t know me, could come into our store and feel comfortable, where she could come in and buy a ring or a TV for her son.”

The image was hurt last December when David Israel, at the time Pawn X-Change’s president, was charged with knowingly buying stolen goods. Israel, who no longer runs the chain of pawnshops, pleaded innocent. The case has not gone to trial.

Business apparently has not suffered at Pawn X-Change, which plans to open two more stores this year.