Pawn Shop – Getting Down to the Basics
Before you deal with a pawn shop, it’s a good idea that you learn about the basics and see how they operate. In this article, we are going to explain what a pawn is and how it works …
What is a Pawn?
A pawn is a short term loan in which you put an item up for collateral, the pawnshop holds the item for an amount of time that is set into your state law, and you have that time plus a grace period to return, pay the amount loaned plus any interest and fees to get your item back.
The laws that govern pawnshops vary from state to state, and in some cases, there are even stricter laws on the county and city levels. For example, in one state, a pawn is a 90 day loan with a maximum interest cap of 13% for the first 30 days, 13% for the second 30 days, and 11% for the last 30 days, plus additional fees. Some states have six month loans, different interest rates, etc. The strategies to pay them off can be applied to any of the situations.
What Do People Pawn?
What do people pawn? Truthfully, people pawn almost anything. The most common pawn is gold and silver jewelry, US gold and silver coins, and watches. We have even seen antiques being pawned. If it has a resale value, most pawn shops will deal with it to some extent.
What is the Purpose of a Pawn?
The purpose of a pawn is to be a short term loan for a vital need and be paid off as quickly as possible. When we say a vital need, we mean something like a utility bill that is near the shutoff date, a vehicle repair when it is your only way to get to work, emergency medical expenses, or something of that sort.
It is not to be used to get money for a date, a kid’s birthday party, drugs, cigarettes, alcohol, casino trips, or any non-necessary household expense. Unfortunately, about 80% of the pawns are made in order to go to the casino, or buy cigarettes, alcohol, or drugs. We have also seen a pawn successfully used to buy equipment for a business startup, so don’t be afraid to think outside of the box.
If you’re looking to get a loan for the local pawn shop, then you will be in luck. As long as you have something the pawnbroker is interested in, then you should be able to get some money from it. On an ending note, pawn shops are also great places to go in order to find items like jewelry, guns, power tools and so on for a fraction of what they would cost if you were to purchase them in retail. If you’re not familiar with what a pawn shop takes in, go look at Cash4jewelrynow.com and look in their section titled “What We Accept” and use that as an example.