Top 10 Pawning Tips

Tuesday, April 3, 2012

-          Get your item appraised beforehand

It’s always a good idea to get your item examined by a professional appraiser prior to entering a pawn shop. That way you’ll know how much it’s worth and whether the pawnbroker is offering you a fair loan or buy amount.

-          Understand market value vs. retail value

Make sure you understand the difference between market value and retail value. Market value refers to how much your item is presently worth given its condition. Retail value is how much the item was worth when it was brand new.  

Reputable pawnbrokers should be lending you an amount equal or close to the real-time market value.  When pawning an item, you should always be aware of how the shop determined the percentage of value it offers customers.

-          Verify pawn security

Before pawning an item, make sure that your possession will be safely stored while you pay off the loan. Also, it’s imperative that all record-keeping is electronic so the transaction documents and loan details aren’t lost.

-          Identify loan interest rates

Pawn loan interest rates vary depending on individual state regulations. For instance, Florida pawn shops can charge customers a rate of 25 percent, regardless of the loan size. The average at traditional pawn shops is 10-20 percent.

-          Research the pawn shop’s reputation

Any pawnbroker you work with should be officially licensed by their local government. It’s also worth doing some online research to see if there are negative reviews.

-          Understand the differences between gold-plated and gold

Be aware that “gold-plated” doesn’t mean the same thing as “gold.” Gold-plated items usually aren’t worth that much and many pawn shops won’t accept them.

-          Read the fine print

Carefully go over the loan paperwork to make sure the pawnbroker isn’t trying to slip one past you. Unfortunately, some shops attempt to burden customers with additional fees and storage costs. Just make sure you know what you’re getting into before signing any pawn loan agreement.

-          Be alert for hidden fees

Hidden fees in pawn loan contracts are not okay! Your pawnbroker should be completely up front with you about all associated costs with obtaining a pawn loan.

-          Clean or refurbish your jewelry before pawning

If possible, have an expert clean or refurbish your jewelry before bringing it into a pawn shop. The reason? You might get more money for the item if it looks brand new.

-          Know which items are best for pawning and selling

Before you pawn, understand how your local pawn shop operates and the types of items they usually loan on. You should also know when it makes more sense to sell something rather than pawn it.

For instance, if you want to upgrade your iPad, it’s best to sell the old version and spend the cash on the latest Apple tablet.

On the other hand, precious metals usually increase in value over time, so pawning them allows you to get a quick loan while retaining ownership, just in case the price of silver or gold skyrockets in the future.

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