It used to be that shops that let you pawn off your valuable items had a negative reputation. People shy away from these shops because some of them feel like pawn brokers cannot be trusted to give them a fair price for their most treasured possessions. Recently, however, the success of TV reality shows about pawning and pawn shop businesses has opened up people’s minds to the idea of using these kinds of shops to get quick cash and other short term loans.
The “pawn” in pawn shop is an action word that means an item of value is being used as collateral in order to borrow money from the pawn broker. But how does that really work?
When you come with a valuable item, the pawn broker would inspect your wares to see if it is indeed something that is valuable to them.
Note that not all items can be pawned off. Some of them, like gold, platinum, and jewelry can be easily pawned off. For other expensive items like refrigerators, washing machines, laptops and phones, you could be hard pressed to find a pawn shop willing to take those in. At www.majorpawn.com we accept similar items. We also accept new and used jewelry, sterling silver flatware, gold and silver coins and the like. For a complete list of the items that we accept visit our website.
Once the item is confirmed to be something that has great value, the pawn broker will approximate the cash value of the item. After he has appraised the item, he will give you an amount that he is willing to loan to you for the item that you are pawning off to him. This is the part where most people get confused.
Suppose they bought a gold ring for $2,000. The value they think that the pawn broker will give them will be $2,000 or something along that line. Even if the pawn broker knows the exact value of your item, he still won’t give you that amount in exchange for your gold ring because he has to factor in the cost of storage of your valuables, the demand for that item, and the security that he has to put up to protect your valuables. Another thing is that the pawn broker isn’t really buying your item. He is simply loaning you an amount and using the item as collateral. All pawn shop owners will only give you a fraction of the retail price of your item, so don’t expect to get the full price that you paid for it.
Once you have agreed to the pawn broker’s price you will need to show some identification and fill up some papers stating that you are pawning off that item.
The paperwork will also contain the interest rate that you will be responsible for paying if you are unable to return the loan on the agreed date. Loan payments usually get paid on a monthly basis. After paying the full loan price plus interest and other handling fees, you get your item back safe and sound.
In the event that you are unable to pay the loan, the interest, and other charges, the item that you have pawned off defaults to the pawn broker and he becomes the owner of that item. He can do anything with it as he pleases and you can’t do anything about it. You can’t go to the police and say that he stole the item because of the agreement that you have signed becomes a legal and binding document.
Once the pawn broker becomes the owner of your item, he can auction off the item to get an even higher price for it or sell it in his shop. You can try buying it back from the owner, but there is a good chance that he will give it to you for a much higher price than the loan that you got in the first place. This is why it is important to pay back loans on pawned items on agreed dates otherwise you lose the item.
If you are unable to pay the loan on time, some pawn brokers may be nice enough to extend the deadline or draft another agreement for more time and more interest on your item. You can try asking the shop owner for requests like this but note that they won’t always want to help you out. They are trying to run a business after all.
Hopefully after reading this article you’ll have a good idea about what pawn shop businesses are actually there for. At majorpawn.com, we extend loans for pawned items. We can also help appraise the value of your treasured possessions so that you know how much they could be worth should you want to pawn them off in the future. If you want to learn more about pawning and pawn brokers in general, you can visit our website at www.majorpawn.com.