Q:

How do pawn shops work?

A:

Quick Answer

According to the National Pawnbrokers Association, pawn shops primarily deal in secured, short-term loans where a customer's belongings are used as collateral. Many pawn shops also offer retail services and buy and resell items.

  Know More
How do pawn shops work?
Credit: Education Images/UIG Universal Images Group Getty Images

Full Answer

The National Pawnbrokers Association states that to receive a pawn loan, a customer only needs to own an item of value. There are no requirements for bank accounts, proof of income or credit checks. When an item is brought in, the pawnbroker appraises it and offers the customer a loan for a certain percentage of the item's estimated value. The pawnbroker charges interest on the loan and holds the item as collateral until the customer returns to repay the loan and its associated interest and fees.

The National Pawnbrokers Association lists the item's value, resale potential and costs of storage as factors that pawnbrokers consider when determining how much to lend. The national average for a pawn loan is $150, but loans are made for larger amounts if the value of the collateral is higher. Interest rates for pawn loans vary by state and locality. Some states even regulate the maximum amount of interest pawnbrokers may charge. A customer who does not repay the loan within a predetermined time frame is in default. After default, the pawnbroker is legally allowed to keep and resell the item that was held as collateral.

Learn more about Corporations

Related Questions

  • Q:

    What is Subway's $2 deal?

    A:

    Subway offered customers the opportunity to buy a six-inch sub sandwich at the value price of $2 for a limited time in 2014. The offer was an end-of-the-year special, and customers were only able to purchase its meatball and cold cuts sub sandwiches at that time.

    Full Answer >
    Filed Under:
  • Q:

    What are some good online pawn shops?

    A:

    The best online pawn shops as of 2015 are iPawn, PawnUp.com, PawnGo, ePawnMarket, Ultapawn, Pawntique and borro, according to specialist site FindMeAPawnShop.com. It is, however, important to note that there are other sites that also offer excellent pawn services.

    Full Answer >
    Filed Under:
  • Q:

    Are pawn shops open on Sunday?

    A:

    Unless state or local laws prohibit pawnbrokers from operating on Sundays, pawn shops are allowed to open on Sunday if they choose to do so. For example, pawnbrokers in Baton Rouge, Louisiana, are not allowed to be open on Sundays at certain times in November and December, notes the Louisiana Office of Financial Institutions. By contrast, EZPAWN opens some of its Utah locations for limited hours on Sundays, as of 2015.

    Full Answer >
    Filed Under:
  • Q:

    How does a Check 'N Go payday loan work?

    A:

    A payday loan is a short-term loan with a very high interest rate, usually secured by a post-dated personal check for the amount of the loan, interest and any fees. In some cases, this is simply deposited by the lender, but online and electronic payday loans are available as well.

    Full Answer >
    Filed Under:

Explore