Have you ever thought about taking your valuables to a pawn shop?
If your immediate answer was a resounding no, or if you think that pawn shops are shady, scary places populated by only the dregs of society, then read on.
Pawn shops are highly regulated by 14 federal statutes and regulations, as well as by state and local laws. They are often family or independently owned. And their customers come from all walks of life.
There is one big choice you’ll have to make if you want to exchange your item for cash: pawn vs. sell? We’ll break it down so you can make an informed decision.
Pawning Items Works Like a Loan
In the movies, people who are down on their luck may take a valuable necklace or firearm to a pawn shop. In exchange, they receive a fistful of cash. And while in many fictional portrayals of pawn shops, those folks never recover their items, the reality is a different story. In fact, some 80% of people who pawn things do come back to repay their loan and take back their possessions.
That’s exactly what pawning is — a loan. What makes it better than a bank loan? It’s collateral based, meaning that if you never return to claim your jewelry, the pawn store simply keeps it. This means no credit checks, no damage to your credit score, and no collection agencies chasing you down.
Most pawn shops advance people a relatively small amount of money — on average about $150. People pawn items to help them get through tight financial times that are temporary, to bridge the gap between a bill that must be paid on the 1st and a paycheck that doesn’t come until the 15th.
Selling Your Valuables to a Pawn Shop
If you have an electric guitar, Xbox One, diamond ring, or antique coin lying around that you are no longer interested in owning, chances are that your local pawn shop will snap it up.
The advantage of selling over pawning? There are no strings attached, and you don’t have to worry about repaying the money or losing your item. That said, it’s important to only sell items that you aren’t attached to.
If you sell Granddad’s old baseball card collection, then learn from Grandma that it might be worth something, you could be out of luck. By the time you go back to the pawn shop, it may already have been sold to someone else.
One slight disadvantage is that selling your item may bring a slightly lower price than pawning. If the pawn shop owner doesn’t feel he can easily sell your possession, he might offer a little less for it. Still, it’s cash — free and clear!
Pawn vs. Sell: It Really Depends
Whether to pawn vs. sell an item comes down to a few factors. Do you want to be able to recover it after your cash flow is a bit steadier? Are you attached to the item? These are the two main questions to ask yourself as you head to the pawn shop, goods in hand.
Have you ever pawned an item? What was the outcome? Any tips for negotiating with a pawn shop employee? We’d love to hear about your experience, so leave a comment below!