Cash 1 Blog
How Do Pawn Shops Work?
If you live in Nevada, or you live in Arizona and visit Nevada, then you've probably seen a lot of pawn shops, especially in the casino districts. You can probably figure out why these places are in such locations, but perhaps you've been wondering how do pawn shops work. If you are considering pawning something to get some much-needed cash, we're about to explain to you the definition of a secured loan and how the process of pawning an item works, and why it would likely be better if you got a no credit check loan or a title loan from CASH 1.
How do Pawn Shops Work?
So you're thinking about pawning something you own, but don't know how pawn shops work, even though you've watched every episode of 'Pawn Stars' on that one channel that used to be about something else but now it's about low budget reality television programs. Actually, they all seem to be like that these days, right?
While that show might not be the best example of how pawning works (have you noticed how similar it is to 'Antiques Road Show'?), it does give you a pretty decent glimpse into what people will pawn in Las Vegas, and why you should always budget, even - and especially - if you're going to spend the weekend gambling.
Pawning is not the same as selling something. You have the opportunity to redeem your item after a certain amount of time to get it back, assuming you can buy back that item from the place where you pawned it. And while this may seem like a good opportunity to get some needed cash, we're sure you might see things differently when we've explained the process to you.
You Will Need Something to Pawn
First, you take your item into the pawn shop, and someone on duty will appraise it. This does not mean you will get that particular amount for the item. It means that your item is worth a certain amount if you were to sell it via private transaction or something similar.
This first step has changed a lot in the last couple of decades thanks to technology. There was a time when the person working in the pawn shop had to know the general value of an item, in order to pay what they consider a fair amount for it. But now, anything can be looked up on the internet to determine its value.
Now that we think about it, this would actually be a good first step. Look up your item on the internet and determine its value. That way you can go to the pawn shop armed with information that is important to know.
It's also important to know that the shop will pay as little as possible for your item, so when they make that first offer, it's definitely a lowball price (except for smaller things like DVDs and so forth; those will always have a set price) in order to spend as little as necessary to acquire your item.
If you don't accept their initial offer, either you will walk away, or they will decide to continue with the transaction. There is nothing wrong with expecting a reasonable offer for your item and haggling over the price. Just be prepared to have your counteroffer rejected and decide ahead of time what the minimum amount will be for the item you intend to pawn.
Pawn Shops May Only Give You Half of the Item's Value
You should expect to get about half of an item's value when you pawn it. For instance, if you have a gold ring that weighs an ounce, and an ounce of gold is worth about $1000, then you might get about $500 for it, though you likely will be offered less than that.
Another piece of information that you will need to know is that pawn shops charge a very high interest rate. This means that if you sell an item to a pawn shop, the interest on that item will likely amount to about $50 a month, which means the longer you leave it in the shop (assuming no one else comes along and buys it), the more it will cost you to redeem it.
When you sell the item, you'll get a slip of paper with the description and worth of that item. That paper is your ticket to redeem the item when you're ready to retrieve it. Understand that pawn shops expect to keep and sell your item, but they do agree not to sell it for a certain amount of time (usually about 45 days) to give you the opportunity to get it back.
Once you've gotten enough money to get your item back, you take your ticket into the shop and pay the amount originally paid to you - plus interest - and they return the item to you. In essence, pawn shop transactions function much like personal loans, but without the monthly repayments that usually come with a loan. Pawn shops will not take installments; you either pay the amount owed all in one lump payment, or they keep the item and move it out to the floor to sell it.
Loans vs Pawn Shops
Now, let's compare that process to getting no credit check loans from CASH 1.
With quick loans or title loan from CASH 1, the repayment is made in installments, not one large lump repayment sum.
Where pawnshops will pay you the lowest possible amount for an item, a personal loan requires no collateral (just proof of steady income), and title pawning is based on the full value of your vehicle. Also, with a title loan, you get to continue using the vehicle for the period of the loan and keep it when the loan is paid off.
How much better does that sound than having to take a personal belonging to a pawnshop and surrendering it for some much-needed cash?
If you find you are in financial need, come see us. We have locations throughout Nevada and Arizona to help you with your small loan or title loan needs.
Joseph Priebe takes pride in assisting audiences with his articles to help them make sound financial decisions.
With over ten years of experience writing financial content his goal at CASH 1 has always been creating engaging and easy-to-digest information for anyone searching for immediate or long-term monetary solutions.
When Joseph is not writing about personal finance, you can find him photographing the Southwest United States with his 4x5 Graflex Crown Graphic camera. He is based in Phoenix, Arizona.