Pawnbrokers

Pawnbrokers are involved in the business of lending money against some form of security that the potential borrower possesses. Depending on the value that the pawnbroker puts on the item that the prospective borrower has put up for security or collateral, will depend how much money the pawnbroker is prepared to lend the borrower.

Pawnbrokers have been around for a long time; in fact the Chinese were doing business on the pawnbroker principle some 3000 years ago. The word pawn comes from the Latin word pignus, meaning pledge, and items that are offered to the pawnbroker are called pledges or pawns, and are in fact the security or collateral by which means the pawnbroker advances money against.

 

How Do Pawnbrokers Work?

Suppose someone needed a loan in a hurry and did not want to be bothered with applying for a conventional loan, filling in paperwork, showing proof of income etc, providing they have some form of collateral on which they could borrow against, the services of a pawnbroker may be the answer. Our prospective borrower, armed with his prized possession wanders off to visit his/her local pawnbroker. The pawnbroker inspects the item and checks it over regarding condition and value, the pawnbroker will also try to evaluate its salability, which if good, may increase the value the pawnbroker puts on the item. If the pawnbroker likes what he sees, he will offer the potential borrower a sum of money for it (usually at below the market value). The potential borrower now has two choices, either to sell the item outright to the pawnbroker, or to put up the item as security against the loan. The length of time the item is to be pawned for is agreed between the borrower and the pawnbroker; this means that the borrower can buy his item back for the amount of the loan plus interest incurred during the time period.

This a legally binding agreement between the pawnbroker and the borrower, so a little thought is needed before entering into this type of agreement.

If the borrower does not pay the pawnbroker back within the agreed period of time, and the pawnbroker does not extent the time limit, the borrower loses the right to purchase his/her item back, and the pawnbroker now becomes the new owner of the item. However, as the pawnbroker has secured the loan with the collateral provided by the borrower, the pawnbroker does not inform the borrower’s credit report, the fact that he/she has defaulted on the loan because the pawnbroker now has title to the item and is at liberty to sell the item (collateral for the loan) in their pawnshop, where they can also sell other items obtained in this way, or items that were bought outright from a customer.

The pawnbroker also takes on the risk of the article he bought in good faith is not stolen property. That is why strict licensing laws are applied to all pawnbrokers. The law requires that a pawnbroker needs to see proof of identity passport, driving license etc, before completing the transaction.

Almost any item can be pawned at a pawnbroker providing it has a value.

Anything made of gold is highly desirable, especially now, because of the price that gold is fetching on the gold market. Even if the gold is contained in broken or damaged jewelry, it is still of value due to its gold content. Other popular items taken as collateral for a loan by pawnbrokers include televisions and computers, software, DVDs etc., all types of tools and musical instruments.

Although pawnbrokers have been around for a very long time, as more and more traditional services go online, the pawnbrokers are no exception. It may be of interest to you to visit one of these ‘online’ pawnbrokers to see just what exactly they have to offer, and if they are suitable for your needs, both as a buyer and a borrower.

Pawnbrokers offer a dual service to the public. If you need cash in a hurry and don’t want to go through the hassle of filling out forms and waiting a few weeks before your loan is approved, then, providing you have something of value that you can use as security, a trip to your friendly pawnbroker may well be the answer to your problem. On the other hand, you may be searching for that special bargain; once again a visit to your friendly pawnbroker may be the answer.

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So there you have it, quick cash or a quick bargain, the choice is yours.