How Pawn Shops Work
Pawn shops have been around for hundreds of years and are no new concept to society. The act of pawning has evolved from ancient Chinese money loans for peasants to online transactions from the comforts of your home (just like what we at cash4jewelry.com do). Being such a popular service to avail of, it’s no wonder people everywhere are getting involved in the pawning business, whether it’s as consumers or brokers. Do you seem interested in the world of pawning? Even if it’s because you like to watch popular pawnshop TV shows or because you plan on pawning off your items at home for some quick cash, it is good to get a head start on familiarizing yourself with how it works.
Basic Pawning System
Whether it’s done in ancient China or the 21st century, pawning has a basic system. First there is a customer who is in need of a certain amount of money to be given to him immediately. The sum can range from something as small and simple as $20 or as big as thousands, this all depends on what item the consumer has to offer to the broker.
Let’s say our customer offers us a gold watch. The value of this watch may be around $500, but since we are giving a loan for this item, we will pay for about 70% of the retail price. Our customer will then be given this loan for a certain period of time under our interest rates. Now, the unique part of pawning will come in. If the person wants his item back, he simply pays the loan off. If the person decides to sell the item to us, we then get to keep it and sell it in our pawn shop.
Items Sold at Pawn Shops
One of the best things about pawning is that on your end, you can offer virtually any item of value that you have in your possession. If you are the broker and the customer decides to sell the item to you, you can sell it second-hand in your pawnshop where potential buyers can flock to you for cheaper goods. Given the nature of pawning, almost anything can be sold and bought.
The most common goods sold by these shops are jewelry because of how easy it is to objectify their value. Customers themselves can determine the estimated prices of their gold and silver based on karats and weight without going directly to a pawnshop yet.
Other items like electronics, tools and even land titles are usually offered by brokers. These items are also sold at much lower prices in comparison to shops that specialize in selling them. Instead of heading to the nearest hardware store for your power tools, it may save you money if you check out the second-hand tools in a pawn shop.
There is no “one size fits all” when it comes to interest rates because they’re actually controlled by the state or country where you live in. For example, the local government of a certain state mandates that the maximum interest rate for a pawned item is 40%, then expect that interest rates in that state will be no higher than what the law says. These interest rates offered by pawnbrokers are typically lower than bank loans. However, be aware that additional fees and service charges may be added because of extra work that brokers must pay for, such as shipping and storage.
Determining your Item’s Value
As you may have guessed, pawnbrokers won’t be giving you a set price for any item you sell them. In other words, the MacBook Pro you offer may not be paid with the same amount they will pay for your neighbor’s Macbook Pro. Practical aspects are taken into consideration when determining your item’s worth, such as age, physical condition, popularity (if the item would be sought after if sold in the shop) and market value.
As stated in the earlier example, the loan value of jewelry can be determined by their weight, thus, most customers prefer this because of the objective appraisal process. Items such as laptops and gaming consoles are heavily affected by trends. Are there newer models of your old MacBook available? Then it is more likely to sell for less since the newer MacBook is currently more popular.
Pawn shops have been around for quite a while and are no new business to people who need money, fast. However, like all services, you should be aware of how their system works to maximize your investments. Don’t be a reckless seller and instead be a responsible customer who knows how proper pawnbrokers operate. Visit our site to get the most reliable services in this industry.