Pawn shops have been around for ages and can be considered one of the older forms of financial institutions, but they also have one of the worst reputations. When using a definition, pawn shops offer small loans of money in exchange for collateral that would not be normally accepted by banks or other institutions that would use collateral. Pawn shops would take jewelry, electronics, firearms and weaponry, and more while a bank would not take those items as collateral. The point of view that people typically get from pawn shops is that it is an easy and quick way to get some cash.
Here are 3 important and good things to know when you are pawning your items.
What is the difference between pawning and selling?
When you are pawning items, you are giving your items to the shop and getting a loan in return. They are considered collateral based loans where the pawn shop can hold onto your items when you use the money, and then you can return and get your items back by giving them the same amount of money. Typically, though, people use pawn shops for a quick buck and never return for their old items that they gave them to get that money. After one to four months of not repaying the loan, the item then becomes possible to purchase and take home yourself. Selling an item is more straightforward than pawning. YOu are giving that item to someone, and they decide how much it is worth to them and show how much money they are willing to give to buy it from you. There is no possible way to get your item back if you want to get it back except for buying the item back, which is not usually easy.
What is market value and what does it mean?
Market value is what amount of money something is worth at that exact point in time. Knowing that information about market value, it can be assumed that you should know what your item is worth at that point in time before you take it into a pawn shop. How much the shop is willing to give you is also dependent on what is in that shop. If there is a lot of the item you are trying to pawn, you are more likely to get a lower price for it.
How do you increase your payout?
In some cases, there are easy ways to increase the possible payout from the shop. If you have a guitar or violin you want to pawn, an easy way to increase that payout is by replacing the strings. Or if you have jewelry you want to pawn, shining and cleaning the precious metals and stones can help you get a lot more money out of your items. But in other cases, it can be very hard to increase payout like if you have a very damaged instrument, you may spend more money repairing it than you will get out of pawning it, so it would not be worth it to repair the item before pawning.
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