Heading to the pawn shop to dump unwanted items may not seem very glamorous, but there are times when a quick trip can make a ton of financial sense. If you have diamonds, gold, antiques, power tools, collectible coins, or guns, for example, pawn shops offer an easy way to ditch these items and get your hands on some easy cash.
Have an engagement ring to sell after a nasty divorce? That’s a great reason to visit a pawn shop in your area, although there may be a better way to sell your engagement ring and sell other jewelry online. More on that in a minute.
The best part about pawn shops is the fact you don’t have to endure the rigamarole of trying to sell your stuff on craigslist.org or your neighborhood Facebook page. Who wants to do that?
However, there are several serious buyer beware warnings. Keep reading!
How pawn shops work
Before we offer tips that can help you maximize your next pawn shop visit, here’s a basic rundown of how these dynamic retail stores work:
Pawn shops 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 pawn shop 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 pawn shop 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 key word 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.
What you need to know about pawn shops
But, we’re talking about selling items in an actual pawn shop here, right? If your goal is taking the money and never coming back, there are several things you should know before you head to a pawn shop to get rid of unwanted valuables — once and for all.
Some items will bring in a greater return
First things first. Which items will get you the most “bang for your buck” at a pawn shop in your area?
According to PawnGuru, the most in-demand items at pawn shops (and the ones that pay the most) include jewelry, watches, power tools, electronics, video games consoles, firearms, and musical instruments. These items offer a higher rate of return because they tend to sell the fastest on the retail end.
It’s possible you could get more money selling your items online
Also note that some items are worth more if you sell them online instead of in a local pawn shop. If you have a lot of high-end jewelry, for example, a platform like Worthy lets you get more money for your items once you receive an informal appraisal and send them in via secure Fedex shipping. Not only will you get more cash this way, but selling your jewelry with Worthy also lets you avoid trying to sell it yourself to strangers in your area, which could pose safety concerns.
If you have gold to unload, you can also get more if you sell small amounts online through a platform like CashforGoldUSA. This website claims to pay 3x more for gold than you’d get at a local pawn shop, and you can complete the entire process online and via secure mail.
Pawn shops only give you 25% to 60% of an item’s resale value
According to NOLO, pawn shops normally give you significantly less than the retail value of your items. 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 pawn shop with as little as $1,000 in your pocket. That’s better than nothing, of course, but it’s not enough for everyone.
This is part of the reason why you shouldn’t sell your engagement ring and gold and silver jewelry at a pawn shop — and why you should sell them online instead. You’ll leave the situation with more money in your pocket, and that’s the whole point, right?
Don't sell your valuables until you're 100% sure you're ready
Another thing to remember is that your pawn shop winnings come in the form of a loan you can repay if you want your stuff back within 30 to 60 days (or whatever timeline the shop specifies). This means you have some time to get your stuff back if you want, but you’ll pay out the nose if you do wind up changing your mind.
While pawn shop fees can vary, many charge interest rates between 12% and 240% 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.
Look for pawn shops close to where you live
Finally, don’t forget that some items are made to be unloaded at a pawn shop nearby instead of online or through the mail.
While it’s easy to sell small valuables like jewelry and gold online, selling larger items (e.g. musical instruments, power tools, etc.) or items with shipping challenges (e.g. firearms) can be a pricey hassle. If you have bulky or heavy items to sell, consider searching for a pawn shop in your area 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.
Holly Johnson is a financial expert, award-winning writer, and Indiana mother of two who is obsessed with frugality, budgeting and travel. Her personal finance articles have been published in the U. S. News, Wall Street Journal, Fox Business, and Life Hacker. Holly is founder of of the family finance resource, ClubThrifty.com, and is the co-author of Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love. Learn more about Holly here.