If you’ve ever driven through a big city, chances are you’ve seen a sign advertising a pawn shop. While pawn shops might conjure up thoughts of unscrupulous business dealings, that’s an inaccurate perception rooted in false preconceived notions. In fact, pawn shops are well regulated and can offer services to people who might have limited alternative options.
If you’re unfamiliar with pawn shops, or have never been to one, you might be curious as to how pawn shops work. This guide to pawning will explain just that.
What type of services does a pawn shop offer?
Pawn shops offer three main services: they offer small loans that you can procure by putting up an item as collateral, they buy items from customers and they sell items to customers. When someone refers to “pawning” an item, they’re usually referring to securing a loan.
How do pawn shop loans work?
Pawn shops are superior to banks in getting small loans because the vetting process isn’t as stringent, and the loan can be processed more quickly. Customers can bring in items like jewelry, electronics or collectibles and get them valued by the pawn shop.
The pawn shop then offers a percentage of that value (anywhere from 25 to 60 percent) as a 30-day loan with interest. The customer then receives a pawn ticket, akin to a receipt that states the amount of the loan, the amount due to the pawn broker, when the loan is due, etc.
If the person taking out the loan fails to repay it, the pawn broker keeps the item that was put up as collateral and can sell it later. Some pawn shops allow extensions on loans, but there may be an increase in interest, and the first month’s interest needs to be paid off first.
How is the value of an item determined?
Pawn brokers factor in several different things when they’re establishing the value of an item. This includes what the item is, the condition of the item and their expected ability to sell it. The pawn broker has multiple research tools available to them to help determine the value of an item, in addition to their own firsthand experience.
Are pawn shops regulated?
In short, yes, pawn shops are regulated by numerous state and federal laws, including but not limited to the Truth in Lending Act and the Equal Credit Opportunity Act. They are also required to keep detailed records regarding who is pawning items, when they’re pawning them and what items are being pawned.
What items can be pawned?
The short answer is almost anything, and we’ll end this guide to pawning with some common examples:
- Video games
- Musical instruments
- Sports equipment
- Tools and yard equipment
- Comic books
- Collectible coins
Call to discuss pawning your items today
As you can see, there’s multiple benefits to using a pawn shop—and now that you know how pawn shops work, you might want to look into pawning something you own. If that’s the case, give us a call at Sydmor’s Jewelry and Pawn Shop. We’ve been operating for over 70 years, and we understand the value of providing exceptional customer service to everyone who walks through our doors.
Categorised in: Pawn Shop
This post was written by Writer