TV loves pawnshops, but should you?

This post comes from Stacy Johnson at partner site Money Talks News.

Pawnshops have been around for a long time, by some estimates thousands of years. And much of that time they've probably been regarded as lenders of last resort. But these days there's apparently a strong movement afoot to change that image.

In the video below, I talk about pawnshops, including one in particular that claims people are pawning to reduce credit card debt. Check it out, then read on for more.

Here's part of a press release from the National Association of Pawnbrokers called, incredibly, "Pawn Shops Save the Day."

... the beauty of the business is not in the "stuff" being pawned at all. The beauty of the business is in the concept that people are helping people. Pawnbrokers are ordinary people, in the business of offering short-term collateral loans to those who might have no other place to turn to in their time of need.

Then there's TV. Shows like "Pawn Stars" and "Hardcore Pawn" have been polishing the image of pawnshops over the past few years.

With all those eyeballs, it's no surprise to see pawnshops expanding and appealing more to the mainstream, including online.

You saw me pull a snippet of a Pawngo.com press release in that video. Here's the whole thing, emailed to me on Jan. 5. It was sent by Pawngo's PR firm, and the twisted logic used here is the reason I wrote this post and did the TV story above. (The bold text is theirs.)

The holidays are officially over and now the battle to maintain those lofty New Year's resolutions begins. But for individuals hoping to get their debt under control in 2012, the arrival of post-holiday credit card statements means a mad scramble for short term financial relief.

As such, Pawngo.com, a full-service online pawn shop, has seen a rising trend in Americans pawning their items in order to make ends meet and paying off credit card debt. Your interest permitting, we would like to offer Todd Hills, CEO and founder of Pawngo, to comment on any or all of the following topics:

• Why consumers are increasingly turning to companies such as Pawngo for their short-term financial needs versus traditional lending institutions

• How Pawngo's website traffic reflects increased activity before and after the holiday season

• The truths and misconceptions surrounding the pawn industry as a whole and its evolution in the digital space

• Stories of specific Pawngo clients who have used online pawning to relieve a variety of financial strains

As the first full-service online pawn shop in the US, Pawngo allows individuals immediate access to the cash they need for life's countless unexpected moments without leaving the comfort of their homes. As evidence of the market for this unique lending model, the company to date has funded nearly $3.2 million in 49 states. Pawngo is venture-backed by Daylight Partners, the $100 million fund started by the founders of Groupon.

Pawnshops serve a function; otherwise they wouldn't exist. I certainly don't have an issue with anyone making an honest living, and that includes those in the pawn business. But let's stop with the Mother Teresa routine, guys. Pawnshops often charge exorbitant interest rates to people who are more often than not in desperate straits. Whitewashing that fact reeks of insincerity. "The beauty of the business is in the concept that people are helping people"? "Allows individuals immediate access to the cash they need for life's countless unexpected moments without leaving the comfort of their homes"? Give me a break.

The simple fact is that paying 3% to 6% interest per month will get you into money trouble long before it gets you out, and it should be avoided if at all possible. Here are a few better ideas:

• Maintain a budget. At the risk of stating the obvious, learning to save more and sticking to a spending plan are better options than short-term fixes like payday loans or pawnshops. Remember: Once you get on a debt merry-go-round, it can be hard to get off.
• Find another lender. Some credit unions offer signature loans (meaning unlike a pawnshop, there's no collateral needed) with rates a fraction of what pawnshops charge. Just about any other kind of loan is better -- even credit cards. Better yet, will your boss give you a loan? A friend or family member?
• Plan ahead. If you're the type who finds yourself in financial hardship from time to time, make arrangements now so if push comes to shove, you can deal with it with the least possible hassle and expense.
• Sell your stuff elsewhere. Don't sell to a pawnbroker, as so many seem to be doing on TV. Whether online or off, pawnbrokers can't give you the retail price of your item. They have overhead to deal with, which means offering you wholesale, at best. Selling through a site like eBay, Craigslist or Amazon requires a little setup and patience, but in the end you'll have more money. 
• Comparison-pawn. Whether you're borrowing or selling, online or offline, it's always worth getting multiple offers. Specialists are more likely to have an accurate assessment of an item's worth than generalists, so if you have jewelry, for example, take it to a few jewelers before checking pawnshops. Getting a better sense of the going rate makes you a better negotiator, and you'll know when to walk away from a rip-off deal.

Bottom line? Forget the press releases and reality TV. Pawnshops are a terrible solution to money problems. If you're serious about fixing yours, check out "Resolutions 2012: 4 steps to destroying debt."

More on Money Talks News and MSN Money:

• Why house hunters shouldn’t watch 'House Hunters'
• Should you pay for credit repair?
• Trans fats -- when cheap gets costly
• How to escape the payday loan trap
• Should you sell Grandma's gold teeth?
• How long to pay off my credit cards?