Car loan pawn title

Because automotive prices have skyrocketed over the past 15 years, it was bound to happen. Pawn shops -- always "banks" for the needy -- have come to the greater Los Angeles area with a new battle cry: "Hock your wheels."

Experts estimate that up to 10 are operating in Southern California. But it's tricky to tell them from run-of-the-mill, independent used-car dealers. That's what they look like, and that's exactly what they are -- legally. In reality, it's used-car hustling with a pawn/storage twist. One radio ad hawks: "If you needed money yesterday, come see us today." "Call Pawn 911," says another.

When a customer arrives, a friendly representative will swap cash for a car or truck that is in his or her name and can pass muster at the Dept. of Motor Vehicles registration and ownership fax/hotline check. The up-front application fee is $50.

"There's not much tire kicking unless I'm the one doing it," says the manager of one store. "They want in, cash, and out. Sometimes I take them to the bus station."

Here's what the deal looks like: The vehicle's owner gets one-half of Kelly Blue Book wholesale price. The "dealer" keeps the signed title, but insurance is the customer's responsibility. The car will be "stored" for up to 31 days. In one case, the storage area is at a new-car dealership with a secure back shop area and plenty of cyclone fencing.

The storage fee is based directly on the amount of money paid out. The rates are more costly at the low end of the scale. For example, a car selling for $3,500 might have a wholesale price of $2,400. The customer would get $1,200. The 31-day storage fee might be $300 -- a whopping 25% per month. But a one-year-old Lexus or Cadillac might bring $10,000 and a storage fee of $1,500.

Cadillacs? Lexus? A visit reveals everything: Here a Mercedes. there a power boat.

"Yesterday, a psychiatrist (pawned a car)," says the owner of one store who prefers anonymity because of a public image of loan-sharking. "Two days ago, a rich foreign student brought in a Mercedes. New, that's an $80,000 car. He's beat it up. It's worth maybe $40,000, but you'd have to put some bucks into it. I asked him what he needed. His figure was $6,000, and he got it. He wanted a ticket and pocket money to go home. but he'll get more money before he comes back."

If the psychiatrist or rich kid don't come back, the pawn shop cleans up on the deal. But the owner of one hock shop says, philosophically, that the object is not to gouge people. "I honestly hope they all come back and get their cars. We don't want to have to sell them," he says. "But if they don't come back, the cars will be sold; some on the used-car lot out front, some at auctions and some wholesale directly to nearby dealers."