Whether you have an emergency need for cash before payday or you're interested in selling items that have value but are just collecting dust in your garage, visiting a pawn shop can be a great idea. But, if you have never been to a pawn shop before, it is important to understand how they work in advance. If you're considering getting a loan from a pawn shop or selling an item outright, continue reading to learn more about the process:
Know that Pawn Shops are Regulated
Pawn shops are sometimes seen in a negative light, but the pawn industry is actually heavily regulated. The federal government has many lawns in place that govern pawn shops, and most states have additional rules and regulations. When you visit a reputable pawn shop, you can have the peace of mind of knowing that you're doing business with a company that follows the rules. A good way to find reputable pawn shops in your area is by visiting the National Pawnbrokers Association's website.
Decide Whether to Get a Loan or Sell an Item
When you want to get money from a pawn shop, you have two options-- you can either pawn an item and get a loan, or sell an item outright. Each one requires a different process. When you pawn an item to get a loan, the pawn shop will offer you a loan amount that is a percentage of the overall value of your item.
If you agree to the terms of the loan, you will leave your item as collateral and have a set amount of time to repay the loan and any associated interest or fees. This will all be outlined on a pawn ticket-- make sure that you put your pawn ticket in a safe place, as you will need it to retrieve your item. In the event that you do not pay back the loan, there are no penalties and the outstanding balance won't be sent to collections. However, when the loan is not repaid, the pawn shop will keep your item and put it up for sale for other customers to buy.
You can also choose to sell an item outright to a pawn shop. In most cases, you will get a higher offer when you pawn an item for a loan compared to selling an item directly. However, if you are just trying to get rid of things that you no longer want or need, selling to a pawn shop can make you some extra cash:
Be Ready to Prove Your Identity and Legal Ownership
Since pawn shops are highly regulated, they must ensure that they are buying items or offering loans to people who legally own the things that they bring in. When selling to a pawn shop or getting a loan, you may need to answer several questions about the items you're selling. In some states, your fingerprint may also be taken. In addition, you will need to provide a government-issued form of identification to process the transaction, and a copy of your I.D. will be kept on file.