If you’re in a money pinch, have you thought about what you’d do? When your parents and friends can’t (or won’t) lend you money and you need to pay rent, what options do you have?
Well, one option is to pawn something of value.
This isn’t necessarily the first option, but there is a reason pawnshops exist. In a pinch, they can help you out.
So, what is something of value? How do pawn shops determine value? What does it actually mean to pawn something? Keep reading to find out the details!
What Does Pawn Mean?
We sometimes think of pawning as the same as “selling.” This is an option at a pawn store. But really, pawning refers to the process of temporarily offering something of value up as collateral for a quick loan.
You leave your watch, or jewelry, or whatever other valuable items you have, with the store, and they give you money. You then have a set period of time to pay the money back, with interest, and then you can get your item back.
Of course, if you can’t pay the money back on time, the pawnshop has every right to sell the item and make the money that way.
TV shows in the last 10 years about pawning have actually been quite good for the pawn business, as more and more people are exposed to this option for getting a loan.
The Advantages of Pawn Shops
So, why would a person go to a pawn shop to get a loan instead of a bank? Well, it’s easier.
The pawn shop has a concrete piece of collateral that they know they can always sell if they need to, so they feel relatively little risk.
Unlike a bank loan, it really isn’t possible for the person who needs the money to go into debt because they’ve already put down an equivalent amount of money to the loan. It provides a great incentive to get your property back.
About 60% of people who pawn items end up getting them back. At least some of those who don’t get the item back are making a conscious decision to do so, valuing the money more than the item.
Having the collateral allows us to give you a loan without any credit check. What would be the point, after all? So, if you have bad credit and need some cash, this is a good option.
Pawnshops are also highly regulated by the government which adds a sense of security.
Anytime you borrow money, there is going to be a cost. Pawnshops are no exception, though the rates are not as bad as many people fear. They are fair for the service being provided!
How Do Pawn Shops Determine Value?
The whole process of pawning items is based on the fact that the pawnshop temporarily owns your item and can sell it for the money that is owed to them, if needed. So, it’s very important that they have a good process of how to determine an item’s value.
How do they do this?
Blue Book Values
Just like everyone else, they make good use of “blue book” values. There are tons of publications that list values of items like cars, motorcycles, and jewelry. When appropriate, pawnshops will use these publications to make a good estimate.
Many of these publications are now online, making it even easier to get an accurate value.
Why make it harder than it has to be?
Experts On Staff
Since gold and jewelry is such a popular type of item that is pawned, many shops will have an expert on hand to make an experienced valuation.
When you have someone with experience who has been making assessments of the same types of items for years and years, they can accurately get a good sense of the value of the piece just by looking. This, combined with using a book value, gives a fine-tuned estimate.
Having a firearms expert is also common since these are also pawned often, but the average person may not have as clear an idea of value as they would for a car. (Cars and motorcycles are pawned, too, but they are a bit more straightforward to estimate the value.)
There are some special circumstances that might come into play when assigning a value to an item. If the person that needs the cash is offering up something of very high sentimental value the pawn store might consider it of higher value.
The higher the sentimental value, the more sure the pawnshop is that the person will pay back the money and retrieve the item. So, they may offer a bit more of a loan in this case than the item is actually worth to another person.
Another special circumstance might be who the person is that needs the cash. If it is a person that might be back for return business, or that has some standing in the community, the pawnshop may be willing to make a larger loan.
What Can Be Pawned?
The list is very long. Essentially, anything that can easily be resold can be pawned. This could include cars, jewelry, firearms, trucks, trailers, watches, and just about anything else that will sell.
We specialize in high-end pawns.
Look Into Pawning Today
If you are in need of a fast loan, with minimal headaches, consider pawning with us. Check out our services, which include buying outright, providing loans, as well as consignment options.
If you are still wondering, how do pawn shops determine value, or if you have any other questions, please don’t hesitate to contact us today!