How a pawn shop works.

Pawn shops provide three main services to their clients:

1. They buy your items of value.
2. They sell previously owned merchandise.
3. They lend you money against an item of value that you have brought into the pawn shop as collateral.

Now, let’s elaborate on each of these three services so that you know exactly how it all works.

1. They buy your items of value.

Basically, a pawn shop will give you cash, on the spot, for almost any items of value that you bring into the shop. These items include gold, platinum, silver, and diamond jewelry, precious gems, electronics such as televisions, computers, video games, household appliances and tools, musical instruments, bicycles, motorcycles, cars, etc.

As long as the item is in working condition and has value.

2. They sell previously owned merchandise.

Pawn shops sell a wide variety of previously owned items at great prices. The benefit of buying merchandise from a pawn shop is that you can often find great deals. You can find merchandise at up to half off the regular retail price.

3. They lend you money against an item of value that you have brought into the pawn shop as collateral.

If you need to borrow money immediately, you can bring an item of value into the pawn shop. The pawnbroker (the person that lends you the money against your collateral) in the shop will determine the fair market value of your item and give you a percentage of that amount in cash, on the spot. You leave your item of value (collateral) there at the pawn shop and leave with your cash. You will have to pay the pawnbroker monthly interest on the borrowed cash. This process is called “pawning.”

At the end of the loan, as long as you have paid the pawnbroker back his cash as well as the interest due, you will get your item of value (collateral) back.

If you do not repay your loan and interest, the pawnbroker keeps your item (collateral).