What’s in a Pawn Shop?
There’s more to a Pawn Shop meets the eye — unless you’re a regular viewer of the reality series “Pawn Stars.” These shops are more than just second-hand stores; they offer loans that carry a lot of interest and may keep your belongings as collateral until you repay the loan plus fees.
Pawnshops offer what are called collateral-based loans, which means you bring in something you own that the pawnbroker assesses as having value and offers to loan you a fraction of its actual price. The pawnbroker then keeps the item until you come in and pay back the loan amount with interest and fees, according to the U.S. Department of Treasury. If you don’t, the pawnshop can sell your property for its own profit.
What to Expect at Your Local Pawn Shop
To pawn something, you must provide a government-issued ID and agree to a certain length of time for the loan period (typically about 90 days, though it can vary by state). Then, if you decide you want to reclaim your items, you have to return the money you borrowed plus any fees or interest within that amount of time, or the pawnshop will put your property up for sale.
The idea behind pawning is to make it as easy as possible for people who need short-term cash but do not want to take out a traditional bank loan. But if you’re not careful, you can end up paying double the price for your item if you don’t repay the loan in time. And you may lose your precious belongings if you don’t pay the right amount of attention to the terms and rates for the type of item you’re pawning.
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