What is a pawn shop? A pawn shop is a place where you can secure a cash loan, by utilizing the value of your personal possessions, and retrieving them when you pay back the loan.
A pawn shop presents their customers with cash offers for short-term collateral loans, or to outright buy the item, based on its value. Whether the customer chooses to sell the item outright, or take a cash loan, depends on them and their needs.
First, and foremost, the offer that is presented, depends on the value of the item in question. That is determined by an assessment from the pawnbroker, based on a few factors.
How Does A Pawn Shop Assess Your Valuables?
Whether you are wanting to sell or pawn your valuables, an assessment of the items is necessary for the pawn shop to make a fair cash offer. Therefore, there are three main factors that a pawnbroker’s offer is based on. They are:
- The condition of the item. Meaning the visual appeal of the item, and the internal condition as well.
- An Item’s current market value.
- Storing the item for the duration of the loan.
A word to the wise… Bring in your valuables in their very best condition. In addition, if there were any accessories that the item came with, make sure that they are all present and accounted for.
How Do Pawn Loans Work?
The interest rates vary from state to state, as well as the duration of the loans. Depending where you are located, pawn loans can vary from 90 to 180 days. But, pawn loans in Arizona, are contracted for 90 days. Typically, for the first 60 days of the loan, the interest rate is 13%, and the last 30 days, the interest rate accrues at 11%.
For the duration of the pawn loan, the collateral is kept at the pawn shop. It is dated and tagged with the pawn number, and secured in the facility until the loan is paid in full. Within minutes of paying off the loan in full, you will once again have your property back in your possession.
What Do I Need To Get a Pawn Loan?
To complete the paperwork for a pawn loan, all you need to provide is a valid and current Driver’s License, or Government issued ID, and a few signatures.
Paying Off The Pawn Loan
You can pay off the loan at any time, without any fees or charges added, for early payment. In fact, many pawn shops offer incentives to pay off the loan within the first 60 days.
Pawn loans generally do not have a payment schedule throughout the loan’s contract. As long as the pawn loan is paid in full by the end of the contract, you’ll have your property back in your possession.
However, if at the end of the pawn loan, you find that you cannot pay off the principal plus the interest, you have two options. You can either pay only the interest that has accrued, and have the loan contract rewritten. Or, at any time you have the option to relinquish the collateral to the pawn shop. That way, you no longer have any obligation to the loan.
Sell Vs Pawn
The choice of whether to sell or pawn your valuables to a pawn shop, there are two things to consider. Whether it is something you are willing and able to part with it, and will you be able to pay the interest and principal before the loan expires. Because, statistically, 75% – 80% of all pawn loans are paid off, and the customer retrieves their belongings.
If you decide to pawn an item, only take the exact amount of cash that you need. Many are tempted to take the full amount offered for a pawn loan, but that is ill advised. Because the more cash you take, the more interest that accrues daily. Otherwise, you are taking a risk of losing something that has more than just a monetary value to you.
When you sell your valuables to a pawn shop, the convenience and time spent is only a few minutes. Although, you should take the time to check eBay and see what the current resale value is of the item. This preparation will give you the insight of how much bargaining leverage you may have.
Are There Any Regulations For Pawn Shops?
Any valuables brought in by a customer, must be their own personal property. Because all items sold or utilized as collateral at a pawn shop, are registered with the police department, to ensure that it is not stolen property. Moreover, if it is stolen property, it is promptly turned over to the police. This is just one of many laws on the books regarding pawn shops in Arizona.
The pawn shop industry is highly regulated, and legally, must follow the legislature passed in their states. These laws provide protection for the community and the pawn shops alike. The following is the link to Arizona’s State Legislation, regarding pawn shops: Arizona’s Trade and Commerce, Title 44, Chapter 11, Article 3.
What Is A Pawn Shop?
A pawn shop is a place you can go, to legally acquire the money you need, and quickly. Pawn shops offer a means of financial lending, that do not rely on or affect your personal credit.
It also is a place where you can find many items, never used and in the box, without paying full retail price. Most importantly, pawn shops contribute to their own local economy. And how? By keeping quality merchandise that is in good condition, fees able to buy, and out of the landfills.Tags: lender, pawnbroker