Pawn shops are businesses that offer a variety of services to their customers, such as buying, selling and lending money on items of value. In this article, we will explain the three main functions of pawn shops and how they work.
Pawn Loans
A pawn loan is a type of secured loan that allows you to borrow money from a pawn shop by using your item as collateral. The pawn shop will keep your item until you repay the loan, plus interest and fees, within a specified period of time. If you fail to do so, the pawn shop will own your item and can sell it to recover their money.
The amount of money you can borrow depends on the value of your item, which the pawn shop will appraise based on its condition, demand and market price. Typically, pawn shops will lend you between 40% and 60% of your item’s current used value on sites like eBay or Amazon.com.
Pawn loans are usually more affordable than other short-term financing options, such as payday loans or credit cards. However, the interest rates and fees vary by state and pawn shop, so make sure you understand the terms and conditions before you agree to a pawn loan.
Selling Items
Another service that pawn shops offer is buying items from customers who want to sell them for cash. This is a good option if you have no interest in getting your item back, or if you need more money than the pawn shop is willing to lend you.
The process of selling an item at a pawn shop is similar to getting a pawn loan, except that you don’t have to repay anything. You just bring your item to the pawn shop, show your valid state ID, and negotiate a price with the pawnbroker. If you accept their offer, you will get paid on the spot and the pawn shop will keep your item.
To get the best price for your item, you should do some research beforehand and find out how much it is worth on the market. You should also clean your item and make sure it is in good working order and has all its parts and accessories. A well-presented item will attract a higher offer than a dirty or damaged one.
Buying Items
The third thing that you can do at a pawn shop is buy items that they have for sale in their retail store. These are items that the pawn shop has either bought from customers or acquired from defaulted pawn loans. You can find a wide range of products at pawn shops, such as jewelry, electronics, musical instruments, tools, antiques and more.
Buying items at a pawn shop can be a great way to save money and find unique or rare items that you won’t find elsewhere. However, you should also be careful and inspect the items carefully before you buy them. Some items may be defective, stolen or counterfeit, so make sure you test them and ask for a warranty or receipt if possible.
You should also compare prices with other sources and haggle with the pawnbroker if you think the price is too high. Pawn shops are often willing to negotiate and lower their prices if you are polite and reasonable.
Lastly, keep in mind that you will be able to negotiate prices with most pawn shops. You shouldn’t do anything too drastic here but if you ask to pay between 10% and 15% under the ticketed price of an item, you might be surprised to learn that they agree to it.
Other Services Pawn Shops Typically Offer
While all pawn shops will differ in the variety of services that they offer to their customers, it is not uncommon for most pawn shops to offer things such as a notary service, check cashing, money orders, or even bill payment services.
In some cases you might find that your local pawn shop is also an authorized Western Union agent. Then you have other pawn shops that do a little bit of everything and will also act as cell phone service providers, some even being authorized dealers for companies such as T-Mobile or Sprint.
Can You Trust A Pawn Shop
Of course you can trust a pawn shop. Pawn shops are like any other businesses, particularly small businesses. Their owners work very hard to build their business, develop relationships with their customers, and as such, they will take great pride in their stores day to day operations.
While you may have heard stories about things that could’ve happened at pawn shops, typically these are untrue. I’m sure, in some scenarios, there have been pawnbrokers that have done things which were less than honest; however, that is absolutely a minority of pawnbrokers, as most pawn shops really strive for excellence.
