Frequently asked questions

Why list with Pawnshops.net?

First and foremost reason would be that it's FREE! We are also the oldest pawnbroker / pawn shop listing site around. We have been listing pawn shops for FREE since 1999! Unlike all the other sites that are out there, we don't scrap the data that we have but manually input each listing. And now we are expanding and offering MORE things to help pawnbrokers and pawn shops grow their business and their reach on the web. Be sure to check out all the things we are now offering for pawn shops and pawnbrokers!

Pawnbrokering Background

As mankind's oldest financial institution, pawnbroking carries on a tradition with a rich history. Pawnbroking can be traced back at least 3,000 years to ancient China, and has been found in the earliest written histories of Greek and Roman civilizations. During the Middle Ages, certain usury laws imposed by the Church prohibited the charging of interest on loans, thus limiting pawnbroking to people who had religious beliefs outside of the Church. Out of economic necessity, and because of problems in the banking system, pawnshops made a resurgence in later years. The House of The Lombards operated pawnshops throughout Europe. They even counted royalty, such as King Edward III of England, among their clientele during the 14th century. The symbol of the Lombards' operations were the three gold balls that still remain the trademark of pawnshops. Pawnbrokers, also known as collateral loan brokers, make loans based purely on the intrinsic value of the collateral. Checking the customer's credit history is not necessary because only the value of the item being pawned is considered. If the loan, or at least the interest, is not paid off during the specified term (usually three or four months), the item is forfeited and may be resold by the broker. A typical transaction begins with a potential borrower coming into a pawnshop with the item he or she wants to pledge. The pawnbroker then determines how much to loan the patron for the item. Loans are paid out at a rate of about one-third to one-half of the price the broker can expect to receive for the sale of a good during the worst of times. This assures that a profit will be made. Pawning has long been a source of capital for people in times of need, as well as a means of financing business ventures. It is interesting to note that when Christopher Columbus approachethe pawnbrokers. Today, statutory regulations of banking and finance are based on the legal foundation established by pawnbrokers. Many of the first leaders in the banking industry had roots in pawnbroking. As was the case 3,000 years ago, pawnshops continue to be a source of convenient credit for individuals in need of a short-term loan.

How does a pawnshop work?

Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to musical instruments, televisions, tools, household items, etc.. These items maintain their value over a reasonable period of time and are easy to store, especially jewelry. All customers provide collateral, eliminating the need to distinguish high risk from low risk borrowers. Typically, loans are small averaging between $70 and $100, although they can be as small as $20 or as high as several thousand dollars depending on the value of the collateral. Contracts vary from state to state, but the average loan period is 90 days. Generally, interest rates will vary with the amount of the loan. The process is much the same as any other lending institution, with the primary difference being the size of the loan, the collateral and the holding of the merchandise until the interest or the loan has been repaid.

Why would someone go to a pawn shop to get a loan?

Pawnshops offer the consumer a quick, convenient and confidential way to borrow money. A short term cash need can be met with no credit check or legal consequences if the loan is not repaid. A customer receives a percentage of the value the broker believes the collateral would bring in a sale. Although the loan to collateral ratio varies over time and across pawnshops, a loan of about 50 percent of the resale value of the collateral is typical. In other words, pawnbrokers feel their loan is "paid in full" at the time it is made. When a customer pawns an item, terms of the loan are printed on a pawn ticket that is given to the customer. The ticket states the customers name, address, type of identification provided to the pawnbroker, a description of the item, amount lent, maturity date, interest rate and amount that must be paid to redeem the item. Most states regulate pawnshop interest rates and other charges, such as storage or insurance fees.

What is the foreclosure procedure?

If a customer defaults, the collateral becomes the property of the pawnshop after the loan is overdue by a specific amount of time, generally one to three months. Most states require the broker to notify by mail the owner of the pledge that he will loose the right to his property unless he redeems it within the stipulated grace period. In case of default, some states require the collateral be sold at public auction. Thirteen states and the District of Columbia require any surplus from the sale of the collateral over the amount owed the pawnbroker, including accumulated interest and any costs related to the sale, to revert to the pawner.

Do most pawning customers lose their merchandise?

On average, 70 to 80 percent of all loans are repaid. Repeat customers make up most of our business, similar to any other lending or retail establishment. Pawnbrokers know the vast majority of their customers because they often borrow against the same items over and over again. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. It is solely the choice of the customer whether he/she elects to repay the loan.

How can I be sure the merchandise I purchase at a pawnshop isn't stolen?

Less than one half of one percent of all loans are identified as stolen goods. Thieves and robbers are a pawnbrokers worst enemy. Pawnbrokers work closely with local law enforcement to catch and prosecute these perpetrators. A customer must provide positive identification to show evidence of the transaction. This information is then presented to the police department, therefore decreasing the likelihood that a thief would bring stolen merchandise to a pawnshop. Pawnbrokers are trained to look for signs of stolen property to avoid these costly mistakes. It is not in the interests of the pawnbroker to accept potentially stolen merchandise because the police can seize the merchandise and the pawnshop owner loses the collateral and the loaned money.

What is the difference between buying at a pawnshop and buying at a retail store?

Mainly price. Pawnshops can offer you merchandise ranging from 1/3 or 1/5 off retail prices.