What Can I Pawn to Make Money?
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Pawn shops have been around for centuries, providing a valuable service to people needing immediate cash. Today, pawn shops continue to be a popular option, with an estimated 30 million Americans without access to bank services using pawn services annually. Pawn stores contribute $3 billion to the U.S. economy, and pawn transactions average less than $180 across the country, according to the National Pawnbrokers Association.
But while pawn shops help meet short-term financial needs, it's important to understand the process and risks involved. In this article, we'll explore the ins and outs of pawning, including its advantages and disadvantages, and provide tips on how to make the most of this option.
In this article
What is a pawn shop and how does it work?
If you've watched "Pawn Stars," then you already know what pawn stores are. A pawn shop is a business that provides short-term loans to individuals who need quick cash, using personal property as collateral. In addition to providing loans, pawn shops also buy and sell various used items. If something has value and there's a demand for this, you can pawn it for extra cash. Think sports equipment, gold jewelry, designer handbags, flatscreen TVs, necklaces, and golf clubs; it can be virtually anything legal.
To obtain a loan from a pawn shop, you would bring in an item of value, and the pawnbroker would appraise the item to determine its worth. If you agree to the loan amount offered, the pawnbroker would then give you the cash loan, which is typically a fraction of the item's value. The loan is typically due within a short period, such as 30 days, and if you are unable to repay the loan, the pawnbroker may keep your item and sell it to recover their losses.
Pawn shops can be a convenient option for individuals who need quick cash but may not qualify for traditional loans or credit. However, it's important to carefully consider the terms of the loan and make sure you can repay the loan amount plus interest to avoid losing your item.
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Things to know about pawning items for money
If you're considering pawning items for money, there are some things to keep in mind:
- Understand the terms of the loan: Before pawning an item, make sure you understand the terms of the loan, including the interest rate, the repayment period, and any fees associated with the loan. It's important to know exactly how much you'll owe and when the loan is due.
- Choose your item carefully: Make sure you choose an item that has value, but that you're willing to part with if you're unable to repay the loan. You should also consider the sentimental value of the item and whether you'll be able to replace it if you forfeit the item.
- Negotiate the loan amount: You can often negotiate the loan amount with the pawnbroker, especially if you have a valuable item. Don't be afraid to ask for a higher pawn shop loan or negotiate the interest rate.
- Keep your pawn ticket safe: When you pawn an item, the pawnbroker will give you a pawn ticket. Keep this ticket safe, as it's your proof of ownership of the item and your receipt for the loan.
- Repay the loan on time: It's important to repay the loan and interest on time to avoid losing your item. If you're unable to repay the loan, contact the pawn shop to see if you can extend the loan or negotiate a repayment plan. Otherwise, you may be unable to get your item back.
- Understand the pawn shop's policies: Different pawn shops have different policies regarding loans and the sale of items. Make sure you understand the pawn shop's policies before pawning an item.
- Shop around: You can often find different loan amounts and interest rates at different pawn shops, so it's worth shopping around to find the best deal. Look for reputable pawn shops that are licensed and insured.
Items you can pawn to make money
Pawn shops accept a variety of items, and the amount of money you can get for pawning these items will depend on their condition, age, and overall value. Generally, items that check all the boxes command a higher price.
Here are some examples of items you can pawn to make extra money:
- Jewelry: Precious metals like gold, silver, and diamond jewelry are popular items to pawn. The value of your jewelry will depend on the quality of the metal and stones and the current market price.
- Electronics: Smartphones, laptops, tablets, and gaming consoles are common electronics that pawn shops will accept. Pawn shops also accept TVs and game consoles like the Xbox. The newer the item and the better condition it is in, the more money you can get for it.
- Musical instruments: Guitars, keyboards, and other musical instruments are also popular items to pawn.
- Collectibles: Rare coins, video games or comic books that are in excellent condition may fetch you the most money.
- Tools: Power tools like lawnmowers and air compressors are items that pawn shops will accept. The value of the tools will depend on their brand, condition, and age.
- Firearms: If you have a legal firearm, you can pawn it at a pawn shop make some quick cash.
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When can a pawn shop reject items?
A pawn shop may reject your item for various reasons, including:
- Condition: Pawn shops usually only accept items that are in good condition and can be resold. If your item is damaged, broken, or in poor condition, the pawn shop may reject it.
- Value: Pawn shops typically only accept items that have a certain value, and they may reject items that they believe are not worth enough to sell.
- Demand: Pawn shops may reject items that they believe they will not be able to sell, such as outdated electronics or items that are not in high demand.
- Legal restrictions: Pawn shops cannot accept items that are illegal to possess, such as stolen goods, illegal drugs or drug paraphernalia, or firearms in some locations
- Suspicion: If the pawn shop has any suspicion about the origin or ownership of the item, they may refuse to accept it.
Pawn shop loan vs. personal loan
Whether a pawn shop loan is better than a personal loan depends on your individual financial situation and needs. But they differ in two big ways:
Loan amount: A pawn shop loan is dependent on the value of item you present. For example, sporting goods or motorcycles will fetch you a higher price than a smartphone. By comparison, you can borrow a far higher amount through a personal loan — as much as $100,000.
Loan terms: Most personal loans offer repayment terms of a few years to as much as seven years. Pawn shop loans often have to be repaid within a few months. Because of this reason, some pawn shop loans may come with higher interest rates as well.
Overall, a personal loan may be a better option as long as you have good credit history and the financial muscle to repay it. In addition, most personal loans are unsecured, meaning there's no collateral, so don't risk losing the item you pawn. However, repaying a personal loan late means your credit score will take a beating.
Pros and cons
Pros
- Quick access to cash: Pawning something can provide you with quick access to cash when you need it. Unlike other forms of borrowing, such as bank loans or credit cards, pawning doesn't require a lengthy application process or a good credit score.
- No credit check: Pawn shops don't typically check your credit score or require a credit check to provide a loan. This makes obtaining money easier for individuals with poor or limited credit history.
- No impact on your credit score: Since pawn shops don't report your loan to credit bureaus, pawning something won't affect your credit score. This can be helpful if you want to avoid a negative impact on your credit.
- No risk to your other assets: Pawning something doesn't require you to put any other assets at risk, such as your car or home. This can be reassuring if you're worried about losing your other assets.
- Flexible repayment options: Pawning something typically comes with flexible repayment options. You can either repay the loan and interest to get your item back, or you can choose to forfeit the item and have no further obligation to repay the loan.
- Ability to get your item back: Unlike selling an item outright, pawning something allows you to get your item back once you repay the loan and interest. This can be helpful if you're only looking for a short-term loan or have sentimental value attached to the item.
Cons
- High interest rates: Pawn shops typically charge higher rates than traditional loans, making it expensive to borrow money. The interest rates can range from 10% to 25% per month, which can quickly add up if you're unable to repay the loan quickly.
- Risk of losing your item: If you cannot repay the loan and interest, the pawn shop can keep and sell your item to recoup their losses.
- Limited loan amounts: The money you can borrow from a pawn shop is typically limited to a fraction of the item's value, which may not be enough to meet your financial needs.
- Reputation of pawn shops: Some people view pawn shops as seedy or untrustworthy businesses, which can make it difficult to feel comfortable using their services.
- Limited time to repay the loan: Pawn shops typically provide short-term loans, with repayment due within 30 to 90 days. This can be difficult to manage if you struggle to make ends meet.
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The bottom line
Pawning items for money can be a useful option for those in need of quick access to cash. If you have a rare item with a high resale value, the pawn shop may even be willing to offer you top dollar. While it's important to weigh the advantages and disadvantages before making a decision, pawning can provide a solution for individuals who may not have other options available.
Before you go down this road, take some time out to understand the terms of the loan, such as the interest rate and repayment period, and to consider the risks involved in forfeiting the pawned item. It's important that you choose a reputable pawn shop and negotiate the loan terms to ensure a fair and reasonable agreement. Ultimately, pawning can be a convenient and practical solution for those looking for fast cash, but it's important to be aware of the potential downsides and make an informed decision based on your individual situation.
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Writer
Jasir Jawaid is Joy Wallet's Assistant Editor. He has more than 13 years of experience as a journalist covering Wall Street, equities, financial policy and regulation, and cryptocurrency and blockchain.
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