How Does a Pawnshop Work?

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October 23, 2019

Have you ever walked past a pawn shop or seen a TV show about one? Why are people so compelled with pawning and using it as a way to get quick cash? Can pawning an item be easy and fast, or does it take as long as getting a loan from the bank? Pawnshops' main profit comes from exchanging money for products. This is known as a pawn loan. Getting some extra cash to pay off a debt or go on a trip is hard to come by. So how does a pawnshop work? Keep reading, and you will find out. Finally, all your questions about pawnshops will be answered, and you can see how easy and fast pawning truly is. 


What is a Pawn Loan?

Pawnshop Basics

A pawnshop acts as a recycling system for valuables, collecting old, used, and sometimes new products and helping them find a home once again. The best thing about a pawnshop is you get quick easy cash for an item, and if you are interested in getting your item back all you have to do is get a pawn loan. By using a pawn loan, you can give your item to a pawnbroker as a form of collateral. He will then collect your item (collateral) and in return, provide you with cash-back. Yup, it’s that easy. If you do trade your item in as collateral, you will then be given a pawn ticket, which will have your receipt for the item, including your fees, description, and expiration date. If you want to get your item back from the pawnshop, you will receive your cash as a loan and pay interest of 15% of the loan throughout the following months until you achieve your item. Just like a regular loan, the longer you wait, the higher your interest payment will be. If you decide you don’t want to retrieve your item, the pawnshop will be able to use your item to resale or do with as they please. Most pawnshops aren’t able to do accept items that require larger loans because they don’t have space, but at Xtreme Pawn, we specialize in larger loans and can accept cars, boats, tractors, and other large equipment as collateral. Pawnshops do not, however, accept title loans.


Repaying the Loan

To repay the loan, you will need to come back into the pawnshop and repay your original loan payment plus interest. Bring proof that the item belongs to you,  such as your pawn ticket and other forms of ID. If you do not wish to pay back the loan and don't care for the item anymore, you can leave it there, but that gives the pawnbroker the legal right to resale your item for income. 


Bank Loans vs. Pawnshop Loans

Getting a loan is terrifying. You have to talk someone else into letting you use their money and convince them that you will be able to return all of it and more. Once you get your loan, you have to find a way to make enough money to pay back what you owe and interest. Then, if you don’t pay it back, you achieve lousy credit. Well, that’s the first difference between bank loans and pawnshop loans. While paying a loan back to a bank can be a hassle and tons of stress, pawnshop loans are the opposite. You can get a loan from a pawn shop stress-free with no commitment. If you can’t make your payment, you won’t have to worry about a bad credit score or have to keep working your head off to make the bank. When you get a loan from a pawnshop, they won’t look at your credit score because, to them, that doesn’t matter. When you can’t make your payment, the pawnshop will acquire the item into their shop and sell it for profit. No need to worry. 

What is popular for a pawn shop right now?

Pawnshops love power tools, these get sold pretty reasonably in the pawnshop industry. Everyone needs power tools these days, and that’s why they are so easy to sell. Gaming systems are also very common, as well — systems like Nintendo Switch, Xbox-1X, and PS4 Pro. However, Pawnshops usually don’t accept any systems or electronics older than five years, unless they are rare or vintage games. Golf clubs are also widespread. You can almost always find a golf club when you go to a pawn shop.  

Do pawn shops accept stolen merchandise?

Every pawn shop has a policy for making sure the item belongs to the man trying to pawn it. To do this, the pawnbroker will ask multiple questions about the item to make sure it’s legitimate. Anyone planning to sell any items to a pawn shop will also have to have a government-issued ID. The pawnbroker will then check the serial number on the object and put it into a database. If the item turns up stolen, the police can then use all the information to track down the thief, and the item will be returned to the owner. 


Thank you for reading our article “How do pawn shops work?” If you are interested in getting a pawn loan or selling an old or used item for cash Xtreme Pawn Shop is the place to go. You can call us at (801) 876-1727 or contact us online to get a quote. 


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