Do you want to pawn it or sell it?
Most people are just discovering pawn shops due to mainstream media shows such as “Hardcore Pawn”. Pawn shops are not new to society; in fact they have been around for more than 3,000 years. Today’s pawn shops operate like mini, non-traditional banks for people of all walks of life. In the United States there are about 12,000 pawnbrokers who deal with a wide variety of items including jewelry, watches, electronics, fur coats, art collections, and more.
Do you know the difference between pawning and selling an item? If you pawn your item, you are using that item as collateral for a cash loan. The pawnbroker will in turn, expect you to repay the principal loan plus interest and fees, within 3 to 4 months (typically), before you receive your item back.
So the difference is if you are pawning your item, you intend to get it back, versus selling the item outright.
If your pawn loan is not repaid on time, the pawn shop takes ownership of your item and offers it for resale. The percentage of people who default on pawn loans is much lower than most expect: approximately 15 -18 %.
Pawning or selling items in a pawn shop can have good deals for both parties involved, however, that’s not always the case. Here are some tips for selling and buying at a pawn shop.
Advice on pawning an item:
- Locate the right pawn shop: Research pawn shops in your area to see what other people are saying about them. What kind of reputation do they have? Also, look at what the pawn shop specializes in; for example: antiques, jewelry, tools, household items, etc. You want to find shops that have experience with the type of item you have.
- Are you pawning or selling? The typical pawn shop will give you the choice, so be educated on the positives and negatives of each. Your decision about pawning should be based on the value you place on your item and your ability to repay the loan and fees by the due date.
- Negotiate: Pawnbrokers are resellers, not collectors – even though the TV shows may lead you to believe they are. Keep in mind that the $1,500 appraisal you have on your tennis bracelet is not the price you will get for it at a pawn shop. Think of a minimum price you would like for your item before you start negotiating and that way you don’t make a snap decision you may regret later.
- Be ready to prove your item: Bring along any receipts or current appraisals you may have on your item. If your item needs a power chord or batteries, make sure you have them so you can demonstrate its working condition. And it is always helpful to have original packaging.
- Prepare your item: Dust on your item is a deterrent even if it is an antique. Bring your item to the pawn shop in the condition you would like it to be in if you were purchasing it: a little spit and polish go a long way!
- Pay on time: Remember if you pawn your item, it is a loan and if it is not paid on time, you will lose your item. So make sure you pay the loan and fees on time per your agreement. Keep in mind that forfeiting your item or extending the loan may carry additional charges.
Advice on buying a pawned item:
- Research the item: It’s not important what the item cost new, what matters is what the current market value is: what is someone willing to pay for it today. Some items hold their value over time better than others. Have a good idea of your item’s value in its current condition before you make a purchase.
- Negotiate: A sticker price on the item should be considered a starting point. Pawnbrokers are good negotiators so make sure you have a spending limit in mind before you begin haggling. Another thing to understand is, the longer a pawn shop has an item in their store, the more they may be willing to lower the price.
- Read the fine print: Guarantees of authenticity are not always offered in a pawn shop. Some stores have a lenient return policy, yet others will not take returns at all. Policies can vary widely so it is important to read them carefully before you buy.
- Pay with cash: Paying with cash may allow the pawnbroker to accept your offer. By using cash, you will also be able to stay within your set spending limits and not accrue any credit card debt.