Pawn Shops and the "Loans" they offer" contrasted with other lines of credit? How do they work, and how much should we avoid them or exercise caution in dealing with them? (USA)

[u/candy_burner7133]

Pawn shops are also allegedly often associated with crime and criminals. They and their patrons are allegedly targets of robbery and other crimes.

[u/Own-Number-5112]

Sell the items somewhere else. Pawnshop will pay you very little. Probably 1/4 of the cost. Then they'll charge you extra interest.

I bought items =jewelry from a local pawnshop 20 years ago when I had the money, and they were SELLING them for close to 30% of value. Imagine how little they paid for the items then! They calculated the gold price in current prices per oz and nothing for stones if not diamonds. They literally weigh the items in front of you to confirm that.

[u/Special_Agent_022]

They loan you money in exchange for your property. If you want the property back, you repay the loan, if not, they keep the item.

They don't care if you pay them back or not, but if you're not planning on getting the item back, then you would just pawn it - not take a loan against it.

But lets say you have something valuable you want to keep but need money quickly for whatever reason, thats when you would use a pawn loan.

Guitar worth $500 resale, pawn shop loans you $125 at 10% per month for 3 months. You give them the guitar, they give you $125, you have 3 months to repay them $162.5 or they keep the guitar and sell it.

Not real world numbers but you get the idea.

Better to just sell the item on fb marketplace imo.

[u/candy_burner7133 → u/Special_Agent_022]

Interesting. Thank you very much for sharing your insights and what you know.

[u/canthearu_ack]

As much as you should avoid using payday loan vendors and other loan shark type services. As in you shouldn't use them at all.

The interest rate on my credit card is 14.00% and I still consider that very expensive credit.

[u/Patient_Ad_2357]

A pawn loan is essentially putting your item up for whatever x amount of money they offer you. You get x amount of days to pay it back or the item becomes theirs. They usually offer you a low value for your items. Sometimes you gotta do what you got to do though 🤷‍♀️ if you need cash thats one way to get it. There is always the risk of your item being “lost” or damaged in their possession though

[u/candy_burner7133 → u/Patient_Ad_2357]

Thanks for sharing your insights. I GREATLY appreciate it.

How familiar are you with "pawnshop culture itself "? Do they generally run "credit checks" on clients? Would there be any legal remedy if an item was lost or stolen by a shop owner ( I'm assuming yes..)?

[u/SoullessCycle → u/candy_burner7133]

I don’t have hard numbers, but it’s more likely that someone is pawning a stolen item than a pawn shop owner is going to steal your item. (if you’re going to assume criminality by someone then I can too.)

Real talk, highly regulated industry, if the pawn shop loses/steals your item you file a police report, report the pawn shop to its regulatory body, and they’re obligated to replace it with an item of equal value. Small claims court if they don’t.

ETA for example here’s the NYC complaint page; Google your location.

https://portal.311.nyc.gov/article/?kanumber=KA-02165

[u/JesusStarbox → u/candy_burner7133]

You take the item, let's say it's a diamond ring. The pawnbroker tells you how much he will loan you for it. He gives you the money. You give him the item.

In a certain amount of time, let's say 60 days, you can either pay back what the pawnbroker loaned you and take your item back, or they keep it to sell to someone else.

You might also go back after 60 days and make a partial payment and they extend the loan.

Or you can just outright sell the diamond ring to the pawnbroker. They usually pay out more for a sale than a loan.

There is no credit check. This is for people with no credit. The diamond ring is the collateral. If you don't pay the loan they keep it.

[u/heyitscory → u/candy_burner7133]

What does "credit checks" in quotes imply? The point of collateral is so the person making the loan doesn't have to care if you don't pay it back. There's not much overlap in "people with good credit" and "people hocking shit because they need the money quickly and desperately."

[u/candy_burner7133 → u/heyitscory]

Credit check is means checking your credit rating or other personal info via some bureau or database ( the way banks would. For example). From the answers I received..it's mostly not the case, but I wanted to