Pawn Shops Thrive as Living Costs Rise

The surge in gold prices has also fueled the expansion of specialist secondhand purchasing stores. Around Hankyu Mikuni Station in Osaka, such businesses have become increasingly common, with one store located just three doors from another and a third only 20 meters farther down the street.

As prolonged inflation puts pressure on household finances, selling unwanted possessions has become an increasingly familiar way to raise cash. Some consumers are making substantial sums from jewelry they no longer use, while others have come to regret parting with possessions that later increased in value.

One woman said she recently sold four pieces of jewelry, including a necklace and rings, for a total of 620,000 yen. She explained that she no longer needed the items because she was getting older and had fewer opportunities to attend parties and other occasions where she might wear expensive jewelry.

Another woman sold a gold necklace inherited from her grandmother for 110,000 yen and used the proceeds to buy an electric bicycle. Although her grandmother had died, she said she felt as though they were traveling together whenever she rode the bicycle to work.

Not everyone was satisfied with the decision to sell. One person recalled selling an item originally purchased for around 12,000 yen for just 50 yen, later regretting the sale because it could still have been used.

Another man sold his motorcycle for 280,000 yen to finance a trip to Brazil. Although the proceeds paid for his travels, he later learned from his son that the same motorcycle could now be worth several million yen.

For people reluctant to part permanently with their possessions, traditional pawn shops offer an alternative. Customers can obtain short-term loans by leaving valuables as collateral, retaining the right to reclaim them once the borrowed money and interest have been repaid.

A long-established pawn shop in Kobe’s Shinkaichi district, which has operated for more than 60 years, provides an insight into the growing demand for such services.

Unlike secondhand purchasing stores, where ownership of an item transfers permanently to the buyer, pawn shops temporarily hold valuables in exchange for loans. Customers generally have three months to repay the principal and interest. If they fail to do so, ownership of the pledged item passes to the pawn shop, which can then sell it.

Among the items recently forfeited at the Kobe shop was a Rolex watch valued at 18 million yen. Its owner had borrowed more than 10 million yen against the watch but was unable to repay the loan.

The shop’s customers have widely differing reasons for borrowing money, ranging from temporary shortages before payday to substantial business expenses and unexpected medical bills.

One regular customer, a man in his 60s, arrived to pawn a diamond ring for the third time. The ring belonged to his wife, who had given him permission to use it as collateral.

He borrowed 30,000 yen, the same amount as on his previous visit. With monthly interest of 8%, he would need to repay a total of 37,200 yen after three months to recover the ring.

The man explained that he needed money to cover expenses before receiving his salary. Although he had previously used credit cards, he preferred pawning valuables because he was reluctant to take on additional card debt.

Leaving a treasured possession as collateral also gave him an incentive to repay the loan and recover it.

According to the shop, approximately 80% of its customers repay their loans and reclaim their possessions.

Another customer, a restaurant owner in his 50s, visited the shop to retrieve a wristwatch he had pawned three months earlier in exchange for a 100,000 yen loan. He paid 105,000 yen to recover the watch.

The watch originally cost around 1.3 million yen and held considerable sentimental value. The man had purchased it as a reward for himself after paying off the debts he incurred when opening his restaurant.

He said he had always intended to retrieve it and had never considered allowing it to become the shop’s property.

The restaurant owner explained that he had borrowed the money to help manage his business finances during a period when large tax payments were due. Although he could afford to pay the taxes, doing so would have placed additional pressure on his cash flow.

He also expressed concern about the future of the restaurant industry, warning that any further increase in the consumption tax could discourage consumers from dining out and place additional financial pressure on restaurant operators.

The shop provides services beyond lending and purchasing valuables. Its expertise in luxury brands allows it to arrange repairs and maintenance for watches and jewelry, including watch overhauls and ring resizing.

The restaurant owner had also entrusted the shop with repairing his watch after it stopped working and collected it following an overhaul.

The largest loan recorded during the visit involved a man in his 30s who arrived at the pawn shop for the first time carrying a wooden box containing a pure gold koban, a traditional Japanese oval-shaped coin.

The coin had been discovered among the belongings of his late grandfather. The man explained that he needed money for living expenses and a substantial upcoming purchase, prompting him to consider temporarily pawning the family heirloom.

After examining the coin, the shop offered him a loan of 1.1 million yen, which he accepted.

Despite borrowing such a large amount, the man said he intended to repay the loan within three months and recover his grandfather’s coin.

Another customer, a woman in her 50s, brought in a gold bracelet that she said had been purchased several years earlier for approximately 100,000 yen.

After assessing the bracelet’s gold content and weight, the shop offered to lend her up to 75,000 yen. She accepted the maximum amount.

The bracelet had been a gift from her mother, making it particularly precious to her. However, her mother had recently been hospitalized, and the woman needed additional money to cover medical expenses.

She said her mother’s hospital and treatment bills had amounted to approximately 180,000 yen the previous month, leaving her struggling to meet the costs.

Rather than selling the bracelet permanently, she chose to use it as collateral, hoping to recover it with money from her annual bonus later in the year.

The experiences of these customers illustrate the different financial pressures driving demand for pawn shops, from everyday household expenses and business cash flow to unexpected medical costs.

While secondhand purchasing stores allow consumers to take advantage of rising gold prices by selling unwanted valuables, traditional pawn shops provide a way to raise money without immediately surrendering ownership of possessions that may carry substantial financial or sentimental value.

Source: KTV NEWS

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