George Souri, a principalat the Atria Group, a private equity firm that invested in Ultrapawn, said his group looked at affluent people as if they were little companies. "When a business needs liquidity to fund operations or growth, they're able to go to the capital markets and use business assets to obtain loans," he said. "The high-end consumer does not have that option. And most consumers in that bracket wouldn't be caught dead in a pawnshop."
Mr. Souri said he had a client with homes in Chicago and Marco Island, Fla., and a Bentley Continental GT for both locations. The client pledged one of the cars, which are worth $250,000 each, to buy a boat for his Marco Island home because he was confident that the cash flow from his other investments would pay off the loan.
In other cases, people simply have too much money locked up in luxury items and not enough cash to pay for things like private school fees or divorce proceedings, both popular uses of high-end pawn loans. One concern among the customers is whether what is beingput up is going to be secure, particularly when it comes to pawn websites where goods are shipped across the country.
(Read more: The world's most expensive divorce settlements)
Todd Hills, founder of Pawngo, says his company, like other online pawnshops, pays to ship and insure the items and that since it is wiring money to someone's bank account, it believes it can confirm the person's identity—to establish ownership just as reliably as someone checking a driver's license in a store.
The high-end portion of the industry is betting that with comparatively lower pawn rates and an ability to fulfill even large loan requests in a day or two, it will be able to build its business on happy repeat customers. Paul Aitken, founder and chief executive of Borro, said he attributed repeat business to the human desire to spend today without thinking about tomorrow.
"Entrepreneurial people like to do things on the spur of the moment, and they're probably not the best planners," he said. "When they have money in their pocket, they like to buy luxury goods. When they don't, they like to use those goods to get money for their next venture."
And that is how he ends up taking a Mercedes McLaren in as collateral for a loan.
--By Paul Sullivan, NYT.com