How pawnshops work, “near me” and online

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A pawnshop, or pawnbroker (same thing), are one of the oldest financial institutions, and also one of the financial institutions with one of the worst reputations — which is not always warranted.

The pawn business is a basic financial transaction, with roots dating to ancient China, the Roman Empire and ancient Greece, according to Encyclopedia Britannica. A famous pawndeal was in 1388 when England’s King Edward III pawned his jewels to the Lombards to finance war against France, and Queen Isabella of Spain used her jewelry as collateral to fund Christopher Columbus’ expeditions to the New World.

Here are a few common questions you might have about pawnshops:

What is the meaning of “pawnshops?”

By definition, a pawnshop offers small loans using collateral that a traditional bank would not accept. For example, pawnshops typically take jewelry, firearms, electronics and furniture against a cash loan — which your local bank or credit union would not.

Pawnshops typically help out people who do not have other access to credit due to poor credit and/or low income. As such, pawnbrokers can get away with high interest rates and fees.

How do pawnshops determine value?

Pawn brokers base the value of your item on an appraised value, condition and what the pawnshop thinks he or she can sell the item for. They make these estimates based on research tools, recent sales, experience, and in the case of gold and jewelry, market rates for silver and other precious metals and gemstones.

How much money can you get from a pawnshop?

Expect about 50% of the resale value if you sell or pawn your item to a pawnshop. More on that here.

How much does a pawnshop make?

You do the math: If a pawnshop sells a diamond ring for $1,000, but pays the seller 50% of that resale value, the pawnbroker makes $500 revenue on that ring.

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Why do people sell to pawnshops?

Pawn shops are a quick way to make much-needed money. Because of the loan component, people who really don’t want to sell their used items can sometimes buy back their collateral when they have the money in the future — which is not possible when you outright sell your possession.

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How pawnshops work

Pawnshops offer cash for items you don’t even want, and on a much faster timeline than if you sold your items yourself. The money they offer comes in the form of a loan you must repay back within a specific length of time, usually 30 to 60 days. If you don’t repay the “loan,” they’ll keep the items you put up as collateral.

This is usually the plan all along. While some pawnshop regulars do use their items as collateral for a short-term loan, but there are just as many who have no intention of coming back for their stuff.  

When you use a pawnshop that way, you’re really just selling your items in the fastest, easiest way possible — albeit for less money than you might get elsewhere. Still, the important keyword here is “might.” You may get more or less money if you sell your stuff yourself, but you won’t really know unless you try.

How pawnshop loans work

If you don’t want to sell your item at a pawnshop, but still need the money ASAP, you can get a loan from the pawnshop.

Pawnshop loans are based on the value, condition and resale potential of the item you bring into the pawnshop. This is how a pawnshop loan works:

  1. Bring your item to the pawnshop, where you will be made an offer for a loan.
  2. You leave your jewelry or other item at the pawnshop as collateral in return for a cash loan with a set term with documentation (often called a “pawnshop loan ticket”).
  3. You walk away with your cash. If you return with your ticket within the set terms of the loan — typically 30 days or more, you cash in your ticket in exchange for your item.

Sound too good to be true? It is.

A pawnshop loan will never equate to 100% of the value of your item. Instead, expect about half of the resale value of the item, plus a pawnshop can legally charge you fees for storage, appraisal, and insurance. For example, if you bring in a diamond engagement ring that is worth $2,000, a pawnshop may loan you $1,000 for 30 days, and charge you $150 in fees — which equates to an APR of 182% APR. 

You must be 18 years old to do business with a pawnshop, provide proof of identity, and in many cases, proof of purchase or proof of ownership of the item. In other words: Don’t try to sell hot items to a pawnshop.

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Pawnshops only loan you 25% to 60% of an item’s resale value

According to the legal experts at NOLO, pawnshops normally give you significantly less than the retail value of your items — 25% to 60%, with abou5 50% of the resale value being average. If you are trying to unload a diamond engagement ring that might sell today for $4,000, for example, you could walk away from the pawnshop with as little as $1,000 in your pocket. That’s better than nothing, of course, but far below the market rate of your valuable.

This is part of the reason why it is rarely advisable to sell your engagement ring and gold and silver jewelry at a pawnshop — and consider selling them online instead:

  • More money right away
  • No steep hidden fees
  • Guaranteed return if you don’t agree to the sales price
  • Payment within 24 hours

How much interest do pawnbrokers or pawnshops charge?

In the event of a loan, many pawnshops charge interest rates between 12% and 24% on top of storage costs and insurance fees, according to the Consumer Finance Protection Bureau. If you want your jewelry or guns back, plan to pony up a lot more cash than you received in the first place.

If you get a $1,000 loan on a gun, you can pay as much as $200 in interest and fees — which goes straight to the pawnshop owner.

The pawnshop also has to pay rent, insurance, utilities, salaries and taxes for employees and other business expenses.

Investopedia reports that pawnshop net profit margins average 15 to 25%.

How long do you have to pay back a pawnshop loan?

Typically, you have 30 days to pay back a pawnshop loan, though this can be negotiated or extended.

What happens if I don’t pay back my pawnshop loan?

If you are not able to repay the loan with the fees within the agreed-upon time, the pawnshop can legally keep the item and sell it. You may have gotten a quick $1,000 for your ring, but had you sold it outright to a reputable jewelry buyer, you would have $2,000. 

Pros of pawnshop loans 

  • Quick money
  • No credit check, co-signer or bank account required
  • Won’t hurt your credit score or appear on your credit report
  • Receive multiple loans

Cons of pawnshop loans 

  • Super-high interest rates 
  • Risk of not getting your item back, having received a fraction of its value — though you may be able to negotiate an extension or renewal for the pawnshop loan.
  • In-person transaction, which may not be convenient for you, and may be intimidating or otherwise uncomfortable.
  • Pawnshops buy a wide range of items, making it difficult for the pawnbroker to be an expert in everything they offer, and making it hard to give an informed quote for every transaction.

Searching “pawnshops near me?” What you need to know

Despite having a seedy reputation, pawnshops are regulated by state and national laws, guided by the National Pawnbrokers Association, and your local pawnbroker is likely listed and rated by the Better Business Bureau, subject to Yelp and Trustpilot reviews, and other ways to determine whether the pawnbroker near you is reputable and honest.

While pawnshops serve their purpose for quick cash for those in a tight spot, there are many serious buyer beware warnings. 

Here are 6 tips if you’re searching “pawnshops near me:”

1. See if a local pawnshop is a member of the National Pawnbrokers Association. 

Pawnfinders.com, run by the National Pawnbrokers Association, is a searchable list of members who must meet certain guidelines for ethical business practices to join.

2. See if your local pawnshop is registered with the BBB. 

The Better Business Bureau accredits and rates businesses large and small based on years’ in business, legitimacy, customer reviews and customer service. You can read customer reviews and see if the pawnbroker was responsive and thorough in addressing their concerns — or totally apathetic. 

3. Make sure their policies are clearly stated

These policies should include the business’s pawnshop loan application, appraisal, storage and insurance fees, and interest and that you can easily reach their customer service by phone or email.

4. Check Yelp reviews for your local pawnshop. 

Yelp in many cities is very active with reviews from local customers who share frank feedback about any number of businesses near you, including pawnshops. You can spend time understanding how much you trust various reviewers’ opinions since you can see all of the companies they’ve reviewed. The pawnshop owner has the opportunity to respond to public complaints.

5. See if your local pawnshop is part of a national chain. 

Below is a few national pawnshops with online and brick-and-mortar retail locations. These tend to be run more professionally, with better customer service and more information online for you to learn about the corporation. 

Cash America Pawn

Buys: Typical items (gold and silver jewelry, smartphones, tablets, electronics and firearms).

BBB Rating: C-

Customer Service Review: 1 out of 5 stars, 85 customer complaints

EZ Pawn

Buys: Typical items (gold and silver jewelry, smartphones, tablets, electronics and firearms). Pawn, auto pawn and gun pawn loans available. 

BBB Rating: A-

Customer Service Review: 1 out of 5 stars, 59 customer complaints

First Cash Pawn

Buys: Typical items (gold and silver jewelry, smartphones, tablets, electronics and firearms). Items accepted vary by location, and items must be presented in store for proper valuation. Cash pawnshop loans are available.

BBB Rating: A-

Customer Service Review: No reviews, 8 customer complaints

Pawn America [both online and 17 retail pawn locations]

Buys: Typical items (gold and silver jewelry, smartphones, tablets, electronics and firearms). Online quotes available with guidance on how to photograph items. Prepaid debit cards available. $10 minimum dollar amount on pawn transactions.

BBB Rating: B-

Customer Service Review: 2 out of 5 stars, 8 customer complaints

6. Consider all options you have for selling your items for cash before going to a pawnshop.

Finally, don’t forget that some items you may consider selling to be at the nearest pawnshop instead of online or through the mail. Other good options include CraigsList, Facebook Marketplace or other local sites where the buyer can come in person to purchase your item. Again, pawn brokers’ business model includes taking 50% or more of the sale price as their commission, so you may fare better selling elsewhere. 

While it’s easy to sell small valuables like jewelry, flatware, coins and gold online, selling larger items (e.g. musical instruments, power tools, etc.) or items with shipping challenges (e.g. firearms) can be an expensive hassle. 

If you have bulky or heavy items to sell, consider searching for pawnbrokers near you instead of trying to sell them on a platform that requires you to pay shipping costs on top of everything else. Shipping a chainsaw to an online second-hand store will not be a profitable endeavor — no matter what anyone says. Instead, head to your nearest 24 hours pawn shop.

More on pawnshop alternatives below.

Is there an online pawn shop?

PawnAmerica.com is the leading online pawnbroker, and they also have 17 brick-and-mortar retail locations in Minnesota and Wisconsin. 

Looking for online pawn shops where you can sell your gold, silver, coins, watches and jewelry?

Trying to sell gold jewelry, coins, gold scrap? Try CashforGoldUSA >>

Have silver jewelry, coins or silverware to sell? Try CashforSilverUSA >>

Alternatives to pawnshops

Here are other ways you can get rid of your old items for cash:

Why use a pawnshop vs. a consignment shop?

Both pawnshops and consignment shops will pay you around 50% of your item’s retail value, up-front, in cash.

The question for any sale of your used item should be: Can I get a better price elsewhere? and, How much work do I have to do to sell this elsewhere?

For clothes, a site like Crossroads Trading, or Buffalo Exchange (in-person or online) likely will be the fastest way to sell a pile of your used clothes, quickly, for some cash. If you have very high-end, luxury items, another consignment store may also be a good option. 

It is very hard to sell your items yourself directly via online marketplaces, as these typically only work if you have a true online ‘store,’ with a lot of products, are experienced at photography, merchandising, online marketing and otherwise running a retail site.

Local consignment is also often a good option for selling your furniture, as furniture consignment stores tend to be experts in vintage, used and antique furniture, and can sell large quantities as customers come to them shopping specifically for used household goods. Plus, shipping furniture is difficult, time-consuming and expensive.

A pawnshop may be a great option if you need cash more than you need your gun, but many other items are better sold for a higher price online to experts who buy electronics, gold, jewelry, and phones.


What is the meaning of pawnshops?

By definition, a pawnshop offers small loans using collateral that a traditional bank would not accept. For example, pawnshops typically take jewelry, firearms, electronics and furniture against a cash loan, which your local bank or credit union would not.


How do pawnshops determine value?

Pawn brokers base the value of your item on an appraised value, condition and what the pawnshop thinks he or she can sell the item for.


How much money can you get from a pawnshop?

Expect about 50% of the resale value if you sell or pawn your item to a pawnshop.


Why do people sell to pawnshops?

Pawn shops are a quick way to make much-needed money. Because of the loan component, people who really don’t want to sell their used items can sometimes buy back their collateral when they have the money in the future, which is not possible when you outright sell your possession.

Wealthysinglemommy.com founder Emma Johnson is an award-winning business journalist, activist, author and expert. A former Associated Press reporter and MSN Money columnist, Emma has appeared on CNBC, New York Times, Wall Street Journal, NPR, TIME, The Doctors, Elle, O, The Oprah Magazine. Winner of Parents magazine’s “Best of the Web” and a New York Observer “Most Eligible New Yorker," her #1 bestseller, The Kickass Single Mom (Penguin), was a New York Post Must Read. As an expert on divorce and gender, Emma presented at the United Nations Summit for Gender Equality and multiple state legislature hearings. More about Emma's credentials.

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