Question 1

How does a pawn work?

Accepted Answer

A pawn is another term for a collateral loan.  Pawnbrokers lend money on items of value ranging from gold and diamond jewelry, musical instruments, televisions, electronics, tools, household items, and more.  Some pawn shops may specialize in certain items.  Loans are based on the value of the collateral.  When a customer pays back the loan, their merchandise is returned to them.  Loan USA offers extensions and renewals.

Question 2

Why would someone go to a pawnbroker to get a loan?

Accepted Answer

Pawnbrokers 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. Pawnbroking imposes a discipline on the borrower that other lenders do not. Pawn loans do not cause people to overextend credit or go into bankruptcy.

Question 3

How much should I expect for a loan on my item?

Accepted Answer

Loan amounts vary according to the value of the item. There is a $10 minimum dollar amount allowed on a pawn transaction and no maximum. Your loan amount will be determined according to other factors as well such as demand and condition of the item.  Not all pawn stores are the same and price will vary.

Question 4

How do you determine the value of the item?

Accepted Answer

Pawn shops base the value of the item on current appraised value, its current condition and the ability to sell the item. Pawnbrokers use research tools that they have at their disposal to determine an item’s value and get you the most money for the item.  The appraisal process varies depending on the type of item—for example, jewelry is evaluated differently than a power tools.  All items that pawn shops buy or pawn are tested to ensure that they work properly.

Question 5

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

Accepted Answer

Less than half of one percent of all pawned merchandise is identified as stolen goods. That’s because customers must provide positive identification and a complete description of the merchandise. This information is then transmitted daily to law enforcement, which dramatically decreases the likelihood that a thief would bring stolen merchandise to a pawn store.

Question 6

Are pawnshops regulated?

Accepted Answer

Yes, Pawnbrokers are governed by all of the major federal laws that apply to entities designed as financial institutions.  The federal laws that regulate the pawn industry are Patriot Act, Truth in Lending Act, Equal Credit Opportunity Act, as well as Data Privacy and Safeguard of consumer information as part of the Federal Trade Commission (FTC) Rules.  States have regulated the pawn industry for decades, and most pawnbrokers are licensed and regulated by local authorities as well.

Question 7

Do pawn customers enjoy the same protections under federal law that customers of other financial institutions enjoy?

Accepted Answer

No. Pawn transactions are the only type of consumer credit that requires reporting to local law enforcement agencies. In many states this reporting is required daily, and must include extremely sensitive personal information about the consumer. Much of this information qualifies as “non-public personal information” under federal privacy law and is entitled to protection as such.

Question 8

Do most pawn customers lose their merchandise?

Accepted Answer

On average, about 90 percent of all pawn loans are repaid. Repeat customers make up a majority of the business, similar to any other lending or retail establishment. Pawnbrokers establish relationships with their customers because they often borrow against the same items repeatedly. 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.

Question 9

Are pawns rates excessive?

Accepted Answer

No. Pawn transactions are short-term loans with no hidden charges. To provide their service, all lenders must charge rates commensurate with the size and duration of the loan, collateral, risk and recourse.

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