Month: November 2016

The Pawn Shop Business

From the name itself, you already have an idea about a business. A pawn shop is a place where you can get an easy loan or quick cash by using a valuable item as a collateral. It is a place where you can go and pawn your valuable items in exchange for cash.

However, every pawn shop has its own set of terms before you can get a loan. A shop can only accept certain items as collaterals for your loan.

We will give you an idea of how the business operates and how it gain profits from its transactions.

Getting a Cash Loan

As previously mentioned, there are only certain items that the shop can accept as an exchange for the approved loan amount. Normally, they will accept platinum, gold or silver jewelries as collateral.

Pawn-Shop-Business

The reason behind this is their value does not quickly depreciate, like other valuable items. Gold, for instance, plays a major role in commodity trading and its value is known to appreciate rather than depreciate. It is for this reason that those who would like to trade commodities store up gold in the hope that eventually, they will get more value than what they initially paid for.

Another reason why shops prefer jewelries is because they can easily assess their value and authenticity. There are trained and skilled consultants who can easily identify a fake jewelry from a genuine one. Unlike other valuables, jewelries can be assessed on the spot after presenting them to the shop. The consultant can appraise their value depending on their quality.

Finally, pawnshops prefer jewelries as collateral because they are not difficult to store. They do not take much space and are easy to secure in a vault.

After assessing the items, you will be quoted an amount as to how much you can get for the value of your item. The amount you are quoted is the total amount of cash that you can borrow from the shop.

Normally, you will receive a slip containing the amount you received, the interest that you have to pay and when you should pay it. Failure to pay for your item at the specified amount means that you are waiving your right of ownership for the items you have pawned.

Selling Items

Apart from just getting loan by pawning your valuables, you can also choose to sell your items. This means that you do not have any plans of getting your item again from the shop.

The thing about selling items is that the shop may ask you additional questions for security purposes. Do not be offended if the shop asks you questions to prove that you are indeed the owner of the items. Depending on the items you will be selling, you may be asked to show proof of ownership or a certificate before the shop buys it.

Pawn ShopThe only reason why the shop has to do this is that as a business the pawn shop must also protect its own interest. Without due diligence, the shop may be sold stolen items and that may cause a problem.

Depending on the shop that you will be dealing with, selling items would normally help get a higher amount of cash compared to you pawning it. The difference is that when you sell items, the shop immediately becomes the rightful owner of the items and they can do whatever they want with the items. Whereas, if you just pawn your items, the shop needs to safely secure it using locks and probably pay someone to look after it.

The shop pays an additional cost to keep it safe. This ensures that when you are ready to get it back, it is still on its best condition.

Buying Items

The pawn shop will also most likely sell unclaimed items or items that have been sold to them. If you buy back an item that you previously pawned and was unable to pay for it on the agreed time, then you can ask the shop if the item is still available for you to buy.

In most cases though, the shop will have available items that you can buy. These items are either sold items or unclaimed items. You must expect though that if you sold an item at a shop and you decide to buy it back, the price will most likely be higher than what you originally sold it for. The shop owner will be the one to decide on the amount they would like the items to sell.

These are the main transactions that a pawn shop deal with on a regular basis. If you really look at it, it is actually a trading place for cash and jewelries. If you are thinking of pawning your valuable items, then make sure to look for a reliable shop to ensure that the transactions will run smoothly.

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The Benefit of Having a Pawn Shop in the Community

Pawn shops have been in existence for centuries, and they’re becoming quite popular once again. They’re unquestionably increasing their popularity in giving cash loans. Many people go for a cash loan offered by a pawn shop over other regular loans and bank loans. There are various reasons pawn shops are improving in offering cash loans.

The fact of the topic is that some people have truly only gotten to know pawn shops for the first time on television through the different TV shows. Well, pawn shops are more than just hubs where they could sell their grandfather’s antique collections, or bargain for that limit edition watch they’ve always wanted. Pawn shops are a critical part of their communities, and numerous people will on occasion have to depend on them to help meet their financial needs.

Pawn ShopFor those born into a middle-class family, there might be some things that they take for granted that other people merely don’t have. For example, a checking account is one thing that they’ve had for years and almost all people do. All the same, there are people in lower-income communities that don’t have checking accounts. Without a checking account, one cannot get a cash advance or loan. So what happens when people need some fast cash to get through a tough month? They seek the help of a pawn shop.

A pawn shop will offer a loan to a person without requiring any kind of bank account:

The only thing a person needs is a worthy item that the pawn shop accepts. Gold jewelry is the common asset and almost everyone has at least one gold ring. This is also the common practice of Metropolitan Pawnbrokers, a famous pawn shop in New York. They help people in New York, particularly those who do not have bank accounts to get loans.

People with miserable credit ratings would surely have a hard time getting a loan. Banks and other lending institutions bet on credit scores almost entirely to find out if they will give someone a loan. Such scores are also used to determine the interest rate that will offered.

Since the recent economic downswing, families and business proprietors are looking to pawn stores for the first time to acquire safety net loans that are perfect for handling unannounced financial needs. Every day, Americans require short-term, small-dollar loans that aren’t acquirable from banks or other lenders. Well, many of these individuals are finding out that modern day pawn shops are clean, trusted businesses that give to consumers from all walks of life. Thus far, many are still unaware of what pawn stores do and how they really work.

 

Pawn shops mainly concern themselves with offering collateral loans:

Pawn stores give loans, bolted by something of value. The pawn store may have other concerns such as retail selling. Still, pawnbrokers focus on lending. Clients bring in their valuables, and the pawnbroker proposes a price based on a per centum of the approximated value. The pawnbroker then stores the item until the customer gives the loan with interest and any extra fees that may employ. Pawn stores are organized by federal state laws. On normal days, customers get only a part of the item’s selling value.

Pawn-ShopTake note that, the pawnbroker is lending money on the item, not purchasing it. The pawnbroker must consider the cost of storage, safety and future need for the item, along with the resale worth if the loan is not cashed. Loans can be ready-made for any sum of money, depending on the worth of the pawned item. Pawnshops give more money to direct-purchase items from their stores than to other items, because they know that they will have the items accessible for direct resale.

In every community, it helps if there are pawn shops that can rescue people from emergency expenses such as medical and educational needs. Simply put, even though these pawn shops have been conventionally associated with profit-oriented business models (as well as shady dealings), they’ve become a vital part of people’s lives. It might even be appropriate to say that without these small firms, many would fail to survive financially – and in some cases, that’s a matter of life and death.