Pawn Laws in AL
Alabama Shops are supervised the Bureau of Loans in the Alabama State Banking Department (Acts 1992, No. 92-597, p. 1227, §2.).
This is an important distinction in the definition of a 'pawn transaction':
A "pawn transaction" does not include the pledge to, or the purchase by, a pawnbroker of real or personal property from a customer followed by the sale or the leasing of that property back to the customer in the same or a related transaction.
Any bank, credit union or finance company regulated by the State Banking Department (pursuant to Sections 5-19-1 to 5-19-19,) is exempt.
A pawn ticket must be typed (printed) or written in English with each pawn or purchase transaction and must include:
- Date of the transaction
- Name, residence and date of birth of the pledgor or seller
- Identification type and number of the client
- Description of the pledgor including approximate height, sex, and race
- Description of the property, including model and serial number if indicated on the property
- Amount of cash advanced
- Maturity date of the pawn transaction and the amount due
- Monthly rate and pawn charges (limited to 25% of the loan principal)
There must be a blank line for the pledgor's signature. (No mention is made of a requirement for the signature of a shop representative.)
Pawned items become the property of the pawn shop 30 days after the pawn date. There is no mention of a 'grace period' in the regs. The pawnbroker is not allowed to confiscate property when authorized law enforcement authorities have placed a 7-day hold (which requires meeting the provisions of Section 5-19A-15).
In contrast, allowable interest, fees and charges are deemed to be earned, due and owning on the pawn date and earned on the same day of the following month.
Example: With a pawn date of February 1st -
- Money is owed to the shop on 2/1.
- The loan expires 30 days later on March 3rd.
- Interest, fees and charges are earned on March 1st.
The use of the word 'day' vs 'date' lends some confusion. Is it the same 'day' (like first Monday of the month) or same 'date' (like 2/1)?
This is not offered as a legal interpretation but as a suggestion that clarification might be provided by the State.
Regulations also require keeping pawn records for 4 years. While software saves time and avoids mistakes, records nonetheless are stored digitally, making them vulnerable to loss (theft, fire, hard-drive crash, viruses, etc) so it would be advisable to do one or more of the following:
- Print a copy of each pawn and store the copy in another secure location (bank vault?).
- Make multiple daily backups of digital records
- Don't store the records on the same hard drive. Use external storage devices like flash drives.
- Store one set of copies online using backup services.
Check with the authority to which the shop is required to report. It may be up to local jurisdictions as to what action would be taken in the event of loss of records beyond the control of the shop owner.
If you've had time to shop around for 'pawn software' perhaps you've discovered that the most expensive programs are offered by vendors who play the game of NOT disclosing costs online, hopefully forcing their website visitors to call for pricing information. The plan of course is to engage callers in high-pressure sales speels.
Why bother? If you have absolutely no intention of paying thousands of dollars over time just for automating your business with a computer program, then start first with Pawnbroker Pawn Shop Software - one relatively low payment for lifetime use (with a nominal annual payment to help keep the software up to date with changes in technology).
You'll have to be sharp in your quest for software. Most software vendors have been at 'this' for years and have become very crafty at hiding the price gouging that will take place once you're embedded into the software. Here are questions to ask:
- How much do I have to lay out to get started?
- What are your monthly or annual support fees?
- Can you increase the fees once I'm locked in?
- Do you require a 'contract' that prohibits me from dumping you when you start raising my costs?
- Can you disable my software when you and I don't agree on how much I owe you?
- How much are you going to charge me for multiple stations at the same location?
- If I open other locations, what will my costs be?
- Do you charge separate fees for specific services like help with Windows, computers, networking?
- Is 'training' included in the price you are quoting?
Offer to make this arrangement: "Before purchasing your software I want a FULL disclosure of any and every fee that you can or intend to levy. If after purchase new undisclosed fees and/or policies to increase my cost show up, I want a full refund.:"
Hang up on any vendor who will not provide you with full disclosure prior to purchase.