Selling vs. Pawning: Which is Better?

February 25, 2020 - Pawn Resources

In need of cash now?

Whether you’re in a pinch for a medical bill or you have to pay rent or credit fees, getting a quick loan from the bank isn’t an easy option.

This is even more difficult if you don’t have a stellar credit score.

One of the best solutions for quick cash is to visit a pawn shop. As a matter of fact, 7.4% of US households turn to pawn stores in times of financial need.

However, should you pawn your item or outright sell it? Selling vs. pawning may seem similar, but there are a few pros and cons that set them apart. Picking one over the other depends on your needs.

Selling vs. Pawning

Before discerning the pros and cons of each, it’s important to understand the differences between selling vs. pawning in regards to pawn stores.

Both terms refer to giving up an item for financial gain. However, selling means, you also give up ownership of the item. When you pawn, you can still get the item back as long as you return the money you borrowed.

At face value, it might look like pawning is the better option. If you dig in deeper, however, you’ll discover there are other factors to consider before opting for either choice.

Pawning Items

As stated, pawning means giving up an item in exchange for money. There are a few wrinkles in this definition.

First off, pawn stores only accept some kinds of items, not all.

The most common items that pawn stores accept include valuable gems like diamonds, genuine jewelry, and luxury watches. You may find some that also accept guns, video game consoles, laptops, smartphones, and other electronic devices.

Pawning also doesn’t guarantee a lot of cash. Pawn stores will estimate the full value of an item and agree to lend you a percentage of that total. When you pay for the item, you also have to deal with interest fees charged on top.

Pros of Pawning

The biggest benefit of pawning is that you can get your pawned item back. If you pawned something with great sentimental value, like your jewelry, there is the guarantee that you can still retrieve it as long as you pay the loan.

Another important benefit is that pawning won’t affect your credit score. Pawn shops only look into the value of what you’re giving them when they transact a loan, not your credit history.

This also means you don’t have to worry about your credit score dropping if you miss a payment or if you default on your loan. Your credit score is independent of your ability, or lack thereof, to pay your loan from the pawn store.

One other benefit is that pawning is a quick process. Applying for a loan at the bank can take days or even weeks at times. There’s no guarantee you’ll get approval, but with pawning, you’ll know right away if they’ll accept your item.

Cons of Pawning

While pawning guarantees you a chance to get your item back, this isn’t forever. Pawn stores will give a strict schedule on your payments, meaning you’ll have to pay the loan in a given period fully. You can renew the loan, but this adds more fees and interest charges, increasing what you have to pay.

You also have to consider that pawning won’t get you a big loan. Even with a valuable item, you’ll only get to borrow a percentage of its worth.

If you can’t pay the loan, the pawn store will claim the item and then sell it to other customers. That’s how they get their money back if you can’t pay.

Selling Items

Pawn stores are popular for quick loans that rely on collateral – like your jewelry – as a means of financial security. However, you can also sell items to a pawn shop.

But why sell instead of pawning? What benefits do you get? What are the downsides to this?

Let’s start with the pros of selling vs. pawning:

Pros of Selling

The main benefit of selling is that you get a much higher value compared to pawning. If you had a watch worth $1,000, the loan you’ll get when pawning may only amount to $300. If you sell the watch, however, you may get up to $800.

In this regard, selling is the better choice if you need enough money and you don’t want to go through the hassle of a loan. You also don’t have to pay anything back. The money you get for the item is yours.

Another advantage of selling vs. pawning is that the prior gives you a chance to get rid of things you no longer need. If you have new jewelry, a new phone, or a new gadget, why pawn them if you don’t need them back? You can sell them and never have to worry about them again.

Because you’re selling the item, you also don’t have to worry about regular payments and interest fees. You get the cash as one big sum in a one-time transaction. This means there’s one less financial headache to worry about.

Cons of Selling

That said, selling an item does mean you’re relinquishing ownership. You’ll never get the item back. With pawning, you can still get it back as long as you pay the fees and the loan.

This also leads to the next downside: because you can’t get the item back, you can’t rely on it for another loan in the future. When you pawn, you retrieve the item and can pawn it again when you’re in need. This isn’t the case with selling.

Pawn or Sell Your Items Without Worry

In need of quick cash? Now you know there are two great options in case you can’t secure a bank loan in time. Selling and pawning seem similar, but their subtle differences are significant to consider before you sign away your valuables.

Looking to sell or pawn something? Feel free to contact us, and we can walk you the process. You can also check out our selection of items for sale, in case something catches your eye.

David Stiebel
David Stiebel

David Stiebel is one of the cofounders of PawnGuru. David was educated at MIT, where he studied Math. He subsequently worked at Bain as a data scientist before starting PawnGuru in 2015. He started PawnGuru to build a better tool for pawn shops and consumers to connect.

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Avatar for Bethany Birchridge

Bethany Birchridge

May 22, 2018, 5:16 PM

I like that this mentioned that selling your items to a pawn shop can get you a much higher value than pawning it. I have some old jewelry that I’ve been wanting to get rid of, but I haven’t been sure if I should sell it or recycle it. It sounds like it may be able to sell for a good amount of money. Do you have any tips for choosing a reputable pawn shop in my area?

Avatar for Mina Edinburgh

Mina Edinburgh

July 6, 2018, 4:07 AM

It was really helpful when you said that one of the benefits of pawning is that the person can actually retrieve the item they have pawned as long as they pay the loan back. But I have heard that there is only a specific time for this and that afterward, I can no longer get the item back. Perhaps, I need to do more research on this before trying it out. After all, I am planning to pawn a very important family heirloom.

Avatar for Mina Edinburgh

Mina Edinburgh

July 12, 2018, 12:10 AM

It was really nice when you said that pawn shops do not look at the credit history if I ever transact with them and that the only thing that is important for them is the value of the item that I intend to pawn. Surely my friend will be thrilled to hear about this because he has a rather unpleasant credit score. Actually, the reason why he plans on selling a few pieces of jewelry was to pay off some of his credit debt. Thanks!

Avatar for Gerty Gift

Gerty Gift

August 13, 2018, 2:53 PM

I liked what you said about pawning not affecting your credit score. My friend is looking for a way to get some money, but knows that a loan from the bank will be really difficult for her to pay back regularly, which will hurt her in the long run. I think that this might be a better option for her instead.

Avatar for Kit hannigan

Kit hannigan

October 23, 2018, 5:39 AM

I am glad that you talked about how people can still get valuable items back such as jewelry from pawn shops as long as they pay the loan. My cousins are currently having some trouble covering all his medical bills after a car crash. I know they have a lot of antique firearms lying around that they father used to collect. Pawling the lot of them can really help them out, and they can always get them back should the money for it comes up.

Avatar for Sariah Meagle

Sariah Meagle

December 21, 2018, 7:38 AM

Pawning is a quick process as you say is really true if I decide to get a pawn shop loans. I do agree that pawning won’t affect my credit score as you mentioned to get a loan. It’s rather interesting that I can get my pawned item back as you pointed out, so I’ll be sure to pay my loan back so that I can get my ring back since I need some apartment money.

Avatar for Dave Anderson

Dave Anderson

April 17, 2019, 11:04 PM

That is nice to know that if I were to pawn something with sentimental value, I could still get it back. Maybe it would be good to pawn some of my gold valuables to get a little extra money. Selling it to a pawn shop would be nice in case I was to regret my decision.

Avatar for Thomas Jameson

Thomas Jameson

May 16, 2019, 5:29 PM

It’s good to know that I’ll get a much higher value if I sell my jewelry instead of pawning it. My wife has some old jewelry that she doesn’t use anymore and wants to get rid of. I’ll bring the prospect of selling it up to her to see what she thinks.

Avatar for Thomas Peterson

Thomas Peterson

July 2, 2019, 6:58 PM

I like how you mentioned the most common items that pawn stores accept include valuable gems like diamonds, genuine jewelry, and luxury watches. I have inherited some jewelry from my grandmother in her passing and was wondering what to do with it. Maybe I’ll have to visit a pawn shop and see what I can get for it.

Avatar for Shayla Cademis

Shayla Cademis

August 7, 2019, 2:33 PM

Thanks for mentioning that pawning jewelry is a quick process. My husband and I are trying to save up for a new car since our morning commute is hectic with only one. I have a lot of old jewelry that I never wear and have no attachment to. Hopefully I can find a great pawn shop in the area so we can get some extra savings!

Avatar for Megan Adler

Megan Adler

October 14, 2019, 4:33 PM

I’m glad you talked about the fact that if we pawn an item and don’t pay in time it won’t affect our credit scores. My husband and I have been going through some hard times and we were thinking about either selling or pawning some of our items. After reading your article I think it would be better for us to pawn that way we can get cash but also get out items back.

Avatar for Eli Richardson

Eli Richardson

December 17, 2019, 3:12 PM

My sister has a lot of missing gold earrings and she is planning to sell them because she’s short in cash. It was mentioned here that selling it in a pawnshop, she will receive a higher value for her gems. Furthermore, it’s recommended to go to a trusted pawnshop to sell her scrap jewels.

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