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What is a Pawn Shop?

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  • Written By: Tricia Ellis-Christensen
  • Edited By: O. Wallace
  • Last Modified Date: 10 September 2016
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A pawn shop is a store that offers money, usually a fraction of the value, for a variety of different items. Such stores have existed as far back as Ancient Greece, with differing rules for how they operate. Normally a person pawns an item at a shop and then has a month or two to redeem it by paying back the money owed. There is usually an additional charge or fee that must be paid prior to getting the item back.

What the pawn shop in modern times cannot do is sell the item before the specified date when a customer can still redeem it. If someone really wants to buy an item, the owner may contact the customer who pawned it and ask him or her if they can sell it. They more offer a bit more money to the customer if the item is in high demand.

The pawnbroker may also take some items on consignment. Instead of offering money to the client right away, he may offer money only if the item is sold. Usually, the profits earned are split between the store and the previous owner. Further, sometimes the pawn shop offers people an opportunity to merely sell their items, which gives the store, in most cases, the ability to sell something right away. People who sell instead of pawn their items usually get slightly more money for the sale.

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Still, the pawn shop usually offers far below market rates for anything that is pawned. This is because it can — many people who must pawn something and can’t wait to sell it at market value are in desperate need of the money. Further, every purchase is a venture. The pawnbroker might end up with an item he can’t sell or doesn’t sell for the price he wants. Therefore, the lower than market value price may offset money lost on items that never sell, and also help to support the shop staying in business.

In the US, there are strict rules regarding the running of pawn shops, the length of time a pawnbroker must wait to sell an item, and sometimes even the percentage of the market value at which an item can be pawned. These rules vary from state to state. Some of the rules are built to protect the potential customer, and others are designed to make sure that any goods that are stolen, that might be knowingly purchased by a pawn shop, can be traced back to the seller, and possible thief.

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pawnshop
Post 9

I go to a Pawn Shop in Oakland, California. It's great.

anon247884
Post 8

Can someone please tell me what are the customer's rights if the pawned item is sold without the consent of the customer? The pawn shop is located in Colorado, if that helps.

anon112242
Post 6

Yes, jewelery is one of the biggest things pawn shops take in. I myself have a pawn shop in Johannesburg, South Africa and we pay according to the gold spot price.

BrickBack
Post 3

SauteePan- I did not know that. I do know that some people also go to pawn shops to buy jewelry and other items as well. They often haggle to try to get the best price on an item.

SauteePan
Post 2

Mutsy- I want to add that sometimes people will go to a pawn shop seeking a loan and put their jewelry up for collateral. Most pawn shops offer very short term loans for of a period of thirty days.

So if you can’t pay back your loan by then, the pawn shop gets to keep your jewelry. There is no credit check for these loans so subsequently there is no damage to your credit score if you can’t pay.

Also, I want to add that pawn shops usually offer about twenty-five percent of the market value of the item and often charge the maximum interest rates allowed by law. Interest rates of twenty-five percent or higher are not uncommon.

mutsy
Post 1

I just want to add that many people take jewelry to pawn shops because they need money quickly and that is usually the most valuable asset that most people can sell.

It is best to shop around before you sell your jewelry so that you can really see how much money your jewelry will command.

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