Most of my friends don’t know what I do as a Pawnbroker, let alone how I do it. Have you ever driven by a pawnshop or seen one in a movie and wondered how they work? Why do they exist and why do they always seem to have guitars hanging in the windows?
Pawnshops have been around for centuries. Some consider the business as old as Mosaic Law. Click here to read more about the beginning of this fascinating business.
How it works?
I’ll do my best to make this easy to understand.
- You take a gold ring to a Pawnshop.
- The Pawnbroker verifies the gold and makes you an offer. You can either decline and ask for more or accept the proposed loan but remember, being polite goes a long way when asking to borrow money.
- Once you have received the amount of money agreed on, you will receive a Pawn Ticket, a contract that outlines your loan and the interest that you will pay on top of the principal loan to get your ring back.
- The length of the contract depends on where you live or the government laws on lending for Pawnshops, where we live, the contract period is 90 days.
- The Pawnshop will keep your gold ring as collateral on the loan until you either pay the loan with accrued interest -OR- the loan expires.
- You can either come back and pay the whole loan and interest to get your ring back or you can just pay the interest to keep the ring in the Pawnshop’s possession. Should you pay the interest, the loan then extends in relation to the months you paid off.
- If you pay out the loan with interest you receive the ring back. Should you let the contract expire with no interest paid, the Pawnshop now owns your ring and can do with it what they want. Most likely sell it.
Why buy from a Pawnshop?
As outlined above, the Pawnbroker has lent money on an item, it’s usually a percentage of the value. If the loan expires and the item gets put out for sale, it will be put out for sale at a fraction of the item’s value. The customer saves money buying a pre-owned item and the Pawnshop makes money selling an item that they purchased for less than it’s original value.
If you have any other questions or would like to see how we can help you with a loan or a purchase, please feel free to call us at 306-522-9889.