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WHAT IS A PAWNBROKER?
A person or business who loans money in exchange for personal property
WHAT IS A PAWNBROKER?
A pawnbroker is a person or business who loans money in exchange for personal property that is held as collateral. This is a form of secured loan, with the lender having the right to sell the collateral if the loan is not repaid.
Pawnbrokers evaluate the value of the collateral, usually determining its value based on current market values for the item.
This value is used to determine the amount of money that can be loaned to the borrower. The borrower will typically receive a fraction of the item’s value, as the pawnbroker needs to recover the loan and interest if the borrower fails to collect the items.
The borrower will then leave the collateral (the item that is being valued) with the pawnbroker until the loan is repaid.
The loan must be repaid before the end of the loan term, which is typically 6 months (this is determined by the pawn broker and agreed upon with the borrower). If the loan is not repaid, the pawnbroker has the right to sell the collateral to recoup the loan amount.
The borrower may also choose to pay an additional fee to extend the loan and avoid having their item sold.
Pawnbrokers can provide access to credit for those who may not have access to traditional banking services.
It is important for borrowers to understand the terms of the loan and the value of the item being pawned before entering into an agreement with a pawnbroker.
For more information on the terms of an agreement with EJ Markham & Son, please call us on 01206 572 646.
LENDING MONEY:
HOW DOES A PAWNBROKER/ PAWN SHOP WORK & HOW DO THEY MAKE MONEY?
- The items left with the pawnbroker as part of the agreement are held as collateral for the loan and are typically sold if the loan is not repaid within the agreed-upon timeframe.
- Pawnbrokers typically lend a percentage of the item’s estimated value, usually around 25-50%.
- To take out a pawnbroker loan in a pawn shop or online, you must bring in/send the item you wish to use as collateral and fill out a short application.
- The pawnbroker will then assess the item, give you a loan offer, and if you accept the offer, you will be given the loan with the item as collateral.
- If you don’t repay the loan within the given timeframe, the pawnbroker will take ownership of the item and sell it to recover the loan amount.
- The interest rate on a pawnbroker loan is usually higher than a bank loan. The length of the loan is usually 6 months, which may not be available through banks.
If you’re looking to borrow money or pawn an item from a pawn shop, it is important to take into account that you are at risk of losing your item should the end of your agreement period end without the full agreed upon amount being repaid to the pawnbroker.
FAQ's
Why would someone use a pawn brokers?
People might turn to pawnbrokers for various reasons. A few common scenarios include; emergency cash needs, no credit checks, short-term financial crunch, no impact on credit score, unbanked or under banked individuals.
Are You An Authorised Dealer?
No, we stock quality pre-owned watches and jewellery, part exchange is welcomed.
Are Your Watches Serviced?
All watches which are taken into stock are carefully examined and are serviced if required. All watches come with 1 year guarantee (6 months on vintage watches)
What is the National Pawnbrokers Association?
The NPA serves as a trade association for pawnbrokers and aims to promote best practices, professionalism, and regulatory compliance within the industry.