Pawnshops


How does a Pawnshop work? Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to household items, etc. Items such as jewelry maintain their value over a reasonable period of time. Items like computers and electronics lose value over time much quicker. Customers provide collateral, eliminating the need to distinguish high risk from low risk borrowers. Typically, loans are small but can reach as high as several thousand dollars or more depending on the value of the collateral. Contracts vary from state to state, but the average loan period is 90 days. In NYS it is four (4) months. Interest rates will vary from state to state. In New York we are only allowed to charge 4 percent per month plus we charge, by law a nominal service and insurance fee. See the US pawnbrokers Contract page. The process is much the same as other lending institutions, with the primary difference being the size of the loan, the collateral and the holding of the merchandise until the interest or the loan has been repaid.
Why would someone go to a pawnshop to get a loan? Pawnshops offer the consumer a quick, convenient and confidential way to borrow money. A customer receives a percentage of the value the broker believes the collateral would bring in a sale.
What is the foreclosure procedure? If a customer defaults, the collateral becomes the property of the pawnshop after the loan is overdue by a specific amount of time (in NYS the pawnbroker must mail you a notice of the defaulting pledge one month prior to the actual default date). You must redeem your item before or on the due date OR extend it by paying the interest due and get another 4 months to pay your loan (5 months total since you receive a notice of default date warning one month prior to default date.)
Do most pawning customers lose their merchandise?The national average 70 to 80 percent of all loans are repaid, at US pawnbrokers our average is 85 to 90 percent. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. It is the choice of the customer to repay the loan.
Are pawnshop rates excessive? NO - not in New York State. The interest rate in New York is of the lowest of the 50 states in our nation.
So what actually happens when you walk into a pawn shop? Most pawnbrokers deal largely in gold jewelry. We deal only with gold, platinum, designer, status watches and some estate jewelry. Loan consultants take their careful time and expertise to value your item and tell you how much they would be willing to lend on that basis. Many customers find the amount they are offered is larger than they need. There are no credit checks, as your item is our security. Pawn broking customers must be at least 18 years of age and have valid identification. At the end, you receive cash and a pawn contract, reminding you that the item is legally yours for at least the next four months.
After that period, we are obliged to give you thirty day final notice to pay off your loan and reclaim your goods, or extend the loan by paying the interest owed. If you fail to reclaim your item the we will have to foreclose on the loan

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