The Complete Guide to How Pawn Shops Work

We’ve all been there. You’ve organized the weekly budget with just enough money for groceries, gas, utilities and — oh, maybe not the unexpected doctor’s visit. Life happens, and when it does, you can count on pawn shops for easy and fast cash.

Rely on this complete guide to learn how pawn shops and brokers work for the next time you have that unexpected “oh no” moment.

What Are Pawn Shops?

Pawn shops are federal-, state- and county-regulated businesses where people exchange their goods for fast cash. Professional pawnbrokers offer a secure and safe exchange for people in a pinch.

At a pawn shop, you collect instant money by exchanging a collateral item, or item with market or sentimental value, for a loan. The loan amount varies depending on the item’s worth as determined through an appraisal. Some customers prefer to skip the loan process and sell their items, following a similar process as a collateral loan, except you pass complete ownership of the item to the pawnbroker.

Or, if you’re looking to buy, pawn shops offer great deals on valuable items, giving you direct access to jewelry, coins, handbags, electronics, tools and even cars at a competitive price.

What to Do at a Pawn Shop

If you need fast cash, take a thorough look around your house, including in the back of the drawers in your jewelry box, for a valuable item. Items that hold the most value for pawning include:

  • Precious metals
  • Coins
  • Jewelry
  • Cars
  • Electronics
  • Musical instruments
  • Tools
  • Firearms

Based on your item’s worth, as determined by the appraiser, you have a few options. At a pawn shop, you can:

  • Receive a collateral loan: A collateral loan helps you secure instant cash without affecting your credit score or credit history, unlike loans or credit purchases made through a bank.
  • Sell your item outright: You don’t have to settle on a loan. You can sell your item outright based on the item’s current market value and liquidity, or availability. Some items may sell for a higher value, so do your research on current market trends and go to a pawn shop that specializes in the type of item you’re pawning.
  • Buy secondhand products: If you’re in a pinch, you’re probably not looking to add anything to your jewelry or coin collection, but pawn shops are reliable sources when searching for like-new items without the high price tag in the future.

Although similar, each option has their unique process. Steps vary depending on what course of action you choose to pursue, the pawn shop and the state or county where you pawn your item.

How to Receive a Collateral Loan

Generally, the pawnbroker offers a loan amount worth a percentage of your item’s value. This percentage varies depending on the type of item, usually higher on valuables like jewelry and lower on goods like power tools.

Compared to items that you sell, your item’s sentimental value plays a role in determining the total loan amount. A pawnbroker wants their customers to come back to repay the loan, and they’re more likely to do so if the collateral item is irreplaceable to them.

Your item is kept secure until you return to pick it up on the agreement’s maturity date. These measures may vary, so double-check with your pawnbroker before transferring possession of your valuable.

Unlike banks, where you fill out lengthy applications and wait long periods before receiving your loan, a pawn shop loans you money immediately. Whether $10 or $10,000, your amount owed accrues interest until you pay back the money. This accrued amount is often significantly cheaper than the amount owed after paying off a credit card bill or bank loan.

How Long Do You Have to Pay Back a Pawn?

Interest typically accumulates over a standard 30-day period. If your maturity date arrives faster than anticipated and you don’t have the money to repay the loan just yet, most pawn shops allow an extension with the condition that you repay the interest before starting another 30 days.

According to the National Pawnbrokers Association (NPA), the average collateral loan is $150, with the wide majority of pawners repaying their loan within 30 days or less. Interest rates vary, but a common rate is anywhere between 5% and 25% a month. Some rates are negotiable for larger loan amounts, like $25,000, but, again, this varies per pawn shop.

You’ll receive a ticket outlining the agreed loan amount, maturity date, interest rates, additional fees and any other vital information regarding your collateral loan. Don’t lose your ticket! This ticket acts as a key to getting your collateral back.

On or before your maturity date, return to the pawn shop to repay your loan amount and retrieve your collateral, or discuss an extension. If you’re late on the repayment without discussing an extension period, you risk penalty fees. If you don’t repay the loan, the pawnbroker may sell your item after a short redemption period to collect the payment.

How to Sell Your Goods

Selling your item is similar to a collateral loan, except you’ve already decided you don’t want to come back for your item. Instead, you’re converting the item directly into cash with no loan agreement involved.

One benefit of selling your good is you might receive more money than you would through a loan, but that’s not always the case. Often, prices are negotiable, but it’s ultimately up to the pawnbroker to establish a fair price based on your item’s value.

Once you come to an agreement, the sale process is straightforward. The pawnbroker pays for your item in full, and you transfer ownership of your item to the pawn shop for them to sell to other buyers.

How Long Do Pawn Shops Hold Items Before Selling?

Federal, state and county laws mandate items that pawn shops can accept. Namely, rules and regulations protect the general public and consumers by preventing the pawning of stolen goods. When you sell something to a pawn shop, there is generally a 30-day holding period where the pawnbroker submits the goods to a database to check against lost or stolen reports.

This holding period, among other regulations, varies by state. For customer reassurance and safety, the NPA helps local pawn shops stay up to date with regulatory requirements and provide business support to uphold a professional industry image.

How Do Pawn Shops Determine Value?

When accepting a collateral item or valuable to sell, pawnbrokers consider a list of variables before determining its worth. Aside from the health of the economy, market value and liquidity, an item’s worth is subjective to the pawn shop.

Above all, pawnbrokers determine value based on their clientele and competitive advantage. If their clientele prefers the luxuries in life, then choose valuables like fine jewelry or name brands like Yves Saint Laurent, Louis Vuitton and Christian Dior.

Visit the pawn shop and get a feel for the type of merchandise they sell to see if your items are a good match. If you can’t make the initial trip, consider calling the store and speaking to a representative or visiting their website to familiarize yourself with their brand and customer base.

If your item is something they accept, pawn shops determine value by:

  1. Existing merchandise: Pawnbrokers first compare your good to existing merchandise to see if they already have something similar. If they do, they might be hesitant to make that leap of faith. But say, for example, your piece is a highly sought after Hermes Birkin handbag. Although these luxury handbags may not sell right away, they’re extremely valuable, meaning the pawnbroker may accept the piece regardless of preexisting merchandise.
  2. Referencing a value database: Before the internet, pawn shops referenced a printed “blue book” that assigned a value to an extensive list of valuables. Now, thanks to the many technological advances made since the beginning of pawning, pawnbrokers reference continually updated online databases and consult online auctions for current selling prices.
  3. Consulting a specialist: Through years of experience collecting valuable merchandise, most pawnbrokers develop a trained eye. Still, some items require specialists, especially as counterfeit luxury items, like handbags and jewelry, become more realistic. The most common specialist is for gold and precious metals whose trained eyes determine a piece’s worth based on the cut and clarity of diamonds, carat weight of gems and gold and other intrinsic characteristics. Some pawn shops prefer to consult a professional for more niche categories, like classic cars, antiques and collectibles.
  4. Considering sentimental value: Most relevant for collateral items, the pawnbroker has the flexibility to determine a piece’s worth based on its sentimental value to the owner. Compared to the other determinants, this criterion largely depends on the pawnbroker’s business preferences. Some may completely avoid accepting pieces of sentimental value because of the possible low resale amount, while others rely on your sentiment to return for repayment.

If pawnbrokers know they can sell something, they’ll be more likely to pay a premium for your item. Although the price is negotiable, remember that pawnbrokers offer a fair deal based on their profit capabilities, too.

How Do Pawn Shops Work in Virginia?

Depending on where you are in Virginia, your pawn shop experience may look a little different. In the state of Virginia, the NPA establishes regulations for:

  • If you lose your ticket: Every pawnbroker distributes a memorandum, or a ticket, to the pawning customer. As the customer, try your best to remember this ticket, but don’t panic if you misplace it. The pawnbroker may charge a lost-ticket fee of $5, and you can still collect your collateral after repayment.
  • If you’re late on repayment: The pawnbroker may not sell the collateral item until after the 30-day period, a 15-day grace period and the obtainment of a statement of ownership. Try your best to make your repayment on time, but if you’re a few days late, you’ll likely face late fees and still receive your collateral.
  • When you leave your collateral: Pawnbrokers shall administer quality care and protection of customer property, protecting them from damage or misuse. This care is subject to random inspections, so you’ll have peace of mind when leaving your sentimental and valuable goods with the pawnbroker.
  • The protection of consumers: Depending on the county, all jewelry and hard goods have a 15-day holding period to check against lost or stolen reports in the state’s database.

When choosing to pawn in Virginia, choose a reputable pawn shop to receive your valuables’ highest value. A reputable shop has the resources available to loan money and buy outright, the experience to provide quality customer service and a loyal customer base who values their tailored merchandise.

Why Pawn With The Vault Jewelry and Loan?

Our team of specially trained professionals is fully prepared to help you when those “oh no” moments strike. We’ve helped thousands of people who’ve faced similar problems, competitively pricing and selling merchandise online and at our physical store locations based in Virginia.

We specialize in a variety of high-value items, like:

  • Gems and precious metals: Our customers look for quality gold, silver, diamonds and gemstones, especially in good condition and with appraisal documentation.
  • Wristwatches: We value brand-name watches, like Rado, Omega, Hublot, Panerai and Rolex. If you still have the original box and care instructions, bring that to the appraisal, too.
  • Designer handbags: From fresh off the runway to timeless vintage pieces like the coveted Chanel Mademoiselle handbag, we’ll look at your designer names like Louis Vuitton, Gucci, Celine, Christian Dior and Hermes.
  • Firearms: Our customers who can legally buy firearms look for up-to-date, well maintained or collectible pieces.
  • Electronics: We look at phones, gaming systems, tablets, camera lenses or any working electronics you find taking up space in your home.

When you visit us, we will guide you through the process. We will carry out an appraisal of your item, determining its value based on condition, appearance, documentation and certificates, as well as customer appeal and market demand. We value your trust, offering the most competitive price for your item, but we don’t mind negotiating to find a mutually beneficial price.

We accommodate any cash need instantly, from $10 to over $100,000, something banks are unwilling to do without more time and intensive paperwork. If your item’s value is high enough for the type of loan you want, we will happily offer you the collateral loan with a fixed interest rate of 10% and a $3 service fee on loans over $100.

On your ticket, you’ll find the maturity date of your collateral loan, listed at 30 days after receiving the money. If you can’t pay back the loan by this date, no worries! Let us know and supply payment of the accrued interest, and we will extend your loan by an additional 30 days. If you forget, we offer a five-day grace period past the maturity date, in addition to the 15-day state-mandated period at no charge to you.

Contact Us for Fast Cash Today

When life throws you a curveball, rely on The Vault Jewelry and Loan for quick cash without impacting your credit score or credit history. Tour your house for any high-value items you want to pawn or sell outright, then contact our trained customer service representatives to continue to the next step towards fast cash.

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