Pawn Shop Basics - Everything You Need to Know




March 10, 2020

Need some quick cash? Have valuable items sitting around gathering dust? You may want to consider heading over to your local pawnshop. You could walk away with a considerable amount of cash in your pocket. There is nothing wrong with selling to a pawnshop, but if you've never bought or sold anything to a pawnshop, you may want to learn more about the transaction process.

Because of the mainstream media, pawnshops have a bad reputation for being shady, dirty and questionable businesses. For most pawnshops, this is far from the truth. Pawnshops are regulated by over a dozen federal laws and several local laws.

If you're not to sure about a particular shop, you can ask your local Better Business Bureau or check on the NPA's (National Pawnbrokers Association) website to see if the store you're searching for is a member.

Getting a Loan

There is more than one way to buy or sell to a pawnshop. To purchase something you can either just use cash, use a personal loan or a collateral based loan.

A collateral based loan is where you give the pawnbroker something you own and if they're interested they will give you a loan. They will keep your item until you pay off the loan. Most often the loan amount will be a fraction of what your item is worth.

When using a personal loan, you're not required to give the pawnbroker any collateral.

You can sell items directly to the pawnbroker however, most pawnbrokers don't like doing this because loans are potentially worth more. When taking a loan, the pawnbroker will give you a "pawn ticket". This is a receipt for your item and it will have the terms of your loan such as, fees, expiration date and a description of your item.

Paying for Loans

There are two choices that you can make if you get a loan.

Pay the balance, including fees before the expiration date, which is most often anywhere from one to four months after getting the loan.

Or, don't pay the balance and the pawnshop will keep the item that you give them. There are no consequences if you decide to not pay the balance, other than the pawnshop keeping the item you placed as collateral. There will be no effect on your credit score. According to the National Pawnbrokers Association, most customers pay the loan and reclaim their items.

Some stores will allow you to extend the expiration date of the loan for a small fee.

What Pawnshops like and don't like

If you plan to pawn something then here are some things you should keep in mind.

Don't try to pawn items that are old, poor quality or too large. These items will most likely not be accepted.

Items that are ok to pawn include: working computers, firearms, jewelry, musical instruments and good quality hand tools.

Don't be surprised if most pawnbrokers seem rude when asking about the items that you are wanting to pawn. Pawnbrokers are legally obligated to verify if you are the legal owner of the item. They will ask you questions about the item until they are comfortable that you are the true owner.

If you are trying to pawn an item and it gets accepted, you will have to show government issued ID. This is required by law.


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