Why Do Pawn Shops Charge So Much – ANSWERED!

Brian McCracken


Pawn shops actually don’t charge all that much for their services in most cases.
So, let’s just clear the air on something right up front because I think it is important.
Across the nation, on average, pawn shops are one of the most affordable forms of short term financing that you will find.
Not only that, the but the loans are what are known as non-recourse loans, meaning that if you default on the loan the pawn shop won’t sue you or come after you alter in any way. There’s nothing that goes on your credit report of anything along those lines.
Pawn shops have been cited in court case after court case as being one the best options for consumer oriented lending options because of their overall affordability.
Now, with all of that having been said, there are some cases and some states in which pawn shops are a more expensive loan option than others and there’s a very good reason for that.
Some people think that pawn shops charge a lot for their services but the truth of the matter is that the rates pawn shops charge are based on the local and state laws which govern them.
Why Pawn Shops Charge What They Do
Pawn shops are primarily a financial service business in that they loan money and collect interest.
As such, pawn shop are closely watched and regulated by various state and local laws, as well as being subject to regular inspections by those governing agencies.
It’s these laws set by the states that determine what a pawn shop can charge in interest for a loan, as well as how long a pawn shop has to told onto items before they can turn around and resell them.
So, when a pawn shop charges you a certain rate, what you have to understand is that the rate they are charging you has been set by the state government that you live in.
This isn’t something that the pawn shop just made up one day or decided to charge – it’s a part of the laws in your area and the pawnbrokers are just following the law as they should.
Are There Exceptions To Those Rates
In most cases, the rates set by the laws in your are are going to maximum rates.
An individual pawnbroker can therefore determine if he or she would like to charge less than the maximum rate.
Although uncommon, this is something that you might see occurring in fiercely competitive markets, such as in states like Florida where it seems that there are 3 pawn shops at every intersection.
Additionally, beyond just changing or lowering the rates, some pawn shops may run specials, such as a first month interest free pawn loan or something similar to that.
However, when it comes to the maximum rate they charge, that’s out of their hands and completely determined by the laws in your area.