A Centennial startup wants people short on cash but too proud to enter a pawnshop to consider meeting in a more comfortable and discreet place: online.
Internet Pawn is banking that a tough economy has created a new generation of consumers eager to borrow against their valuables.
“It used to be easier to go to a bank and get a credit card or home-equity loan,” said Todd Hills, chief executive of Internet Pawn and a co-founder along with James McHose.
Hills, who sold his Jumping Jack Cash pawn chain in 2007, had considered starting an online pawnshop five years ago, but the timing wasn’t right.
Credit was still easy to get, and consumers weren’t as comfortable transacting financial business online.
The pawn business, with a 3,000-year tradition of face-to- face transactions, also has adapted slowly to the Web.
“This is the first time someone (in the U.S.) has tried to process a pawn loan transaction online from start to finish,” said Tim Lanham, former president of the Colorado Pawnbrokers Association.
The average pawn loan is only $80, not enough to justify shipping bulky collateral such as bikes and air compressors, Lanham said.
To get around that problem, Internet Pawn (internetpawn.com) focuses on smaller, high-value items that can be mailed — jewelry, coins, precious metals, heirlooms.
“If it plugs in, we don’t take it,” Hills said. “It needs to ship easily.”
Vintage and collectible cars are an exception.
The firm targets an average loan of $3,500 but can lend up to $100,000.
Larger loan amounts and more favorable terms should appeal to entrepreneurs and professionals who normally wouldn’t consider pawning items, Hills said.
A traditional pawnshop loan lasts a month, with an interest rate of 15 percent or more, depending on state laws.
Internet Pawn lends at 5 percent interest per month for six- month periods.
Customers submit a loan request online, including an estimate of the pawned item’s resale value. Loans are made for half of an item’s value.
The customer ships the item via FedEx, and the company checks items against a proprietary database.
Among the first customers when the company started in June was a mortgage broker who borrowed against luxury items he had showered on his wife during better days, Hills said.
He called going into a pawnshop humiliating but was willing to borrow online, Hills said.
Aldo Svaldi: 303-954-1410 or asvaldi@denverpost.com
