Pawn shops are great, reliable sources for quick cash when you find yourself in a pinch. But, how do you get the most money out of your valuables? We get this question a lot, and the answer varies depending on the person, their collateral or unwanted item and their needs.
Here, we’ll outline the unique pros and cons of selling and pawning, and how to make the right choice to get you the most money in your pocket.
Selling vs. Pawning
You have two options at a pawn shop — sell your unwanted item for cash, or pawn a collateral item for a short-term loan. Both require you to take a look around your house and find something valuable, like:
- Precious metals.
- Musical instruments.
- Accessories and apparel, such as designer handbags.
- Sporting goods.
What you do with that item is up to you and the agreement you make with the pawnbroker. Before visiting your local pawn shop, develop a game plan by considering the pros and cons of both options:
Pros of Pawning
When we talk about “collateral,” we mean anything with monetary or sentimental value that you keep with the pawnbroker in exchange for a short-term loan. The pawnbroker keeps your collateral safe while you spend the cash on what you need, and save up the money to pay back the loan once it’s due.
If you choose to pawn a collateral item, you benefit from pros like:
1. You Can Get Your Item Back
One of the biggest advantages of pawning your item is you can get your collateral back — with a catch. If you default on a loan, meaning you can’t pay it back, then the pawnbroker keeps and sells your item to make back the money they loaned to you.
2. Doesn’t Affect Your Credit Score
Another very common question we get is whether pawning affects your credit score. No, pawning does not affect your credit score! Banks ensure you pay back your loan by sending the debt collectors after you and tanking your credit score, but defaulting on a pawn loan only means you don’t get your item back.
3. Fast Loan Access
If you find yourself in a pinch, the banks will still make you fill out forms and go through the time-consuming process of receiving a bank loan. At a pawn shop, you can get fast cash on-the-spot. Depending on the pawn shop, you can leave with $10 to over $100,000 in your pocket. Just remember you eventually have to come back with it in your pocket, too.
Cons of Pawning
If you choose to pawn a collateral item, you’re also faced with cons like:
1. Stricter Payment Schedule
When you hand over your collateral, the pawnbroker will give you your loan, as well as a ticket stating the loan’s maturity date. Typically, pawn loans are short-term with a standard 30-day payback period.
If you’re coming up on your loan’s maturity date and don’t have the money to pay it back, some pawn shops allow you to extend the date another 30 days. If you don’t want to extend your maturity date and rack up more interest fees — our next con — then there is usually a cushiony grace period, but afterward, they’ll sell your piece.
2. Additional Interest Fees
The amount you pay back to the pawnbroker is more than the amount given to you. Interest accumulates over the 30-day period at a rate determined by the pawn shop, which varies anywhere between 5% and 25%. Interest rates can vary depending on your loan amount, too.
3. Doesn’t Guarantee a Lot of Cash
If you bring in an item worth $1,000, that doesn’t necessarily mean you’ll get a $1,000 loan. Often, you’ll receive only a percentage of an item’s actual value. It’s up to the pawnbroker’s discretion, meaning you can receive different loan amounts for the same item depending on where you go.
Pros of Selling
Selling a valuable item to a pawn shop is a much simpler process. Once you find an unwanted item of value in your house, you can take it to a pawn shop and receive instant cash — and that’s pretty much it.
If you choose to sell your valuable item, you benefit from pros like:
1. Receive a Higher Cash Value
If you bring in an item worth $1,000, you’ll get only a percentage of that amount in pawn loans, but sometimes you’ll get a higher percentage if you sell outright. The cash amount you receive for your valuable item depends on the pawnbroker.
If they think they can sell the item fast and for a higher price tag, they’ll offer you more money. Comparatively, if it’s a harder sale or they already have similar items in-store, they may offer you less money than they would if you pawned it.
2. You Don’t Have to Pay Anything Back
Once you give the pawnbroker your item and they pay you for it, you don’t have the weight on your shoulders of a maturity date or interest rate. Once you sell it, you don’t have to come back, unless you want to spend that money on other pawn shop merchandise.
3. Exchange Things You Don’t Need for Cash
If you keep side-eyeing a designer handbag in your closet or a video game console collecting dust in your basement, you can directly translate those valuables into cash. Also, selling your unwanted valuables to pawn shops saves you from the time and stress it takes to sell the same items online on other second-hand sites.
Cons of Selling
If you choose to sell your valuable item at a pawn shop, you’re also faced with cons like:
1. You Can’t Get the Item Back
Unlike pawning your item, you can’t get your item back if you choose to sell it. Once you receive the money, the ownership of the item transfers to the pawn shop. If you sell it and decide you want it back, there’s not much you or the pawnbroker can do.
Pawn shops are regulated at the county, state and federal levels, and certain protection laws prevent pawn shops from selling an item to the person who sold it to them in the first place. So, it’s important you’re 100% sure about your decision to sell.
2. You Can’t Resell It in the Future
Hypothetically, you can keep re-pawning the same collateral over and over again if you find yourself repeatedly in a pinch. But, if you choose to sell, you can’t get the item back to resell in the future.
3. Harder to Sell Than Pawn
Pawnbrokers are generally more selective when buying merchandise than providing a collateral loan. Collateral sit in a secure location within the pawn shop, only seen by the pawnbrokers until they return it to the item’s owner. When pawnbrokers buy an item, they’re considering how their customers will value the piece and how fast they think they can sell it.
If they don’t think their customers will respond well to your item, then you’ll either get a lower value or no offer at all.
Is Pawning or Selling Better?
Now that we know the unique pros and cons of selling and pawning, which will get you the most money for your item? We can’t give you a universal answer — as the most profitable decision depends largely on the person, their collateral or unwanted item, their needs and the pawnbroker — but we can give you some pointers to lead you in the right direction.
After weighing the pros and cons, ask yourself:
- Do you have an item the pawnbroker would want to buy?
- Are you willing to part from your item?
- Is there a higher sentimental value or market value?
- Do you have the means to pay back a short-term loan?
If you have an unwanted item that you’re comfortable parting with, we suggest selling it to get the most money so you don’t have to worry about paying back a higher dollar amount later. Comparatively, if you’re looking for fast cash and have a valuable item with sentimental value, you may get a higher short-term loan by pawning it rather than selling it just at its market value.
Is It Better to Sell or Pawn Your Jewelry and Gold?
People will always want jewelry and gold — especially gold jewelry! If you have a piece of jewelry or gold with high-value materials, you can liquidate it by either pawning or selling it. If your piece is a family heirloom or something with sentimental value, consider pawning it for a decent short-term loan amount. Or, if you’re willing to part with it, the pawnbroker may make an agreeable offer based on its intrinsic value or selling potential.
Pawnbrokers will take a look at your jewelry even if it’s damaged, mismatched or missing a stone. Pristine jewelry and gold will earn you more money, but even jewelry in poor condition can be melted down and used based on its intrinsic value.
Intrinsic value refers to the basic value of the precious metals — namely gold, silver, platinum and palladium — diamonds and other gemstones that make up the piece of jewelry. These materials never go out of style, but they do fluctuate in value and demand.
What Jewelry Has the Highest Value?
In the past 100 years, we’ve seen jewelry trends like geometric emerald bands, tasseled sapphire necklaces and mixing and matching layered diamonds and pearls. Although fashion changes, the desire for high-value precious metals, diamonds and gemstones don’t.
Your jewelry might be more valuable if it’s:
- Vintage: Jewelry pieces with aged characteristics are highly sought-after, and some may have even appreciated over the years. Vintage jewelry has a higher chance of being hand-made and may contain uniquely-cut diamonds and other gemstones, which influence how much pawn shops pay you.
- A designer brand: Jewelry may go out of style, but designer names less so. Brand-name enthusiasts place a high value on designers like Cartier, Chanel and Tiffany. Rolex is particularly sought-after, globally recognized as the best-known luxury watch designer, and appreciates over time.
- Gold: Right now, gold is spiking in value, and pawnbrokers are eager to look at your gold jewelry or other gold items.
- Diamond: Diamonds are popular enough to earn their own assortment of cliches. A diamond’s value varies depending on their carat weight, color, cut and clarity, but are always highly sought-after and valuable.
If you have a valuable jewelry or gold piece, consider the long-term value before pawning or selling it. For example, if you have an authentic Rolex watch, a pawnbroker will likely make a generous offer if you want to sell out-right for immediate cash. Or, you can pawn it now, and pawn it again or sell it in the future for a higher amount.
Tips on How to Get the Most Money at a Pawn Shop
Whether you choose to pawn or sell, you can influence how much money you get at a pawn shop in other ways, too.
1. Clean Your Item
If you’re trying to sell your car, you wouldn’t roll up to the dealership with fast food bags littered on the floor, a deflated tire and a dirty exterior. Instead, you’d spend the extra time and money to vacuum the interior, fix your tire and do a quick drive through the car wash.
The same goes for any valuables you plan on pawning or selling, particularly the latter. Let’s say, for example, you have a beautiful gold necklace. You used to wear this necklace for years, then made it a home in your jewelry box for another few years. Odds are that it needs a good cleaning to look brand-new.
Or, say it has a broken clasp. The investment of paying a jeweler to repair that clasp may make you more money in the long-run. The more customer-ready and sellable your piece is, the higher the amount the pawnbroker will offer you.
2. Do Your Research
Pawnbrokers determine your item’s worth based in part on its current resale value. Before going to a pawnbroker, rely on your preferred search engine and research what your item is selling for online. Doing this allows you to gain a general idea of your valuable’s worth, and you can discern if the pawnbroker is offering you a fair price.
Additionally, avoid putting yourself in a box and selling your item at the first pawn shop you visit. Get quotes from a handful of pawn shops, and pawn or sell your item to the pawnbroker that offers you the most money.
3. If You Have Documentation, Bring It
When you originally bought your item, it may have come with documentation on its authenticity and value. This is especially common for high-value jewelry and designer labels, like Rolex watches or Chanel handbags. Documentation can boost resale value, so bring it with you and show the pawnbroker.
If you have the original receipt of purchase, show that to the pawnbroker, too. Most pawnbrokers are knowledgable on name brands and common merchandise, but the original value can help them make a more informed, fair appraisal.
4. Remember That Prices Are Negotiable
Pawnbrokers have the luxury of choosing their prices and appraisals, and you have the privilege to negotiate. Your item is ultimately yours to decide what to do with, and most pawnbrokers are respectful of your decision.
If a pawnbroker offers you an amount far below your item’s estimated value, you can counteract that offer with a higher value and support your claim using research or documentation. The pawnbroker will work with you until you come to a dollar amount that’s fair to both parties.
Get a Competitive Appraisal or Loan Amount at The Vault Jewelry and Loan
Our professional associates at The Vault Jewelry and Loan strive to reinvent the pawn shop experience. When you visit one of our seven Virginia locations, our team will get to know you and suggest the best option to get the most money in your pocket. Our prices and appraisals are flexible. We’re open to negotiating a price that’s fair for you and your luxury items.