Often we find ourselves in a position where we need cash quickly due to an unforeseen event in our lives, what most people do is go to their bank and apply for a loan there or compare personal loans online and apply for the one that suits their needs and credit, sometimes you can’t go to a bank or apply online for a loan because you have bad credit or they’ll take too long and you need the cash now.
So what do you do?
One of the solutions to this problem is Pawning your goods till you pay the loan back.
The pawn shop industry fills a certain need that no banking system out there can cover. A bank loan takes time to process and in most cases, the pawn shop customer doesn’t have time. The idea of easy cash is the reason why most people are drawn to a pawn shop instead of banks or other lending institutions.
Any pawn shop’s transaction can be divided into four easy steps:
- A customer brings items to be used as a basic collateral for a loan.
- Now the pawnbroker assesses the value of the items and gives a proposed amount. It is quite vital then for the pawnbroker to be adept in testing to see if the items are genuine or fake (in the case of precious metals or gems). Should the customer agree to the amount, s/he then enters into a transaction with the pawnbroker. The pawnbroker then hands the customer a receipt that shows the items, amount loaned, the amount to be paid back and the time frame in which to do so.
- The customer repays the loan within that time period and gets his/her items back.
- In the case where the customer doesn’t pay the loan back, the pawnbroker gets to keep the items.
Should you not need a loan and just want to sell your valuable items, same steps apply without the paying back the money part.
But is it safe?
Most definitely! No person can run a pawn shop without a license. To get a license, they first have to complete and submit a pawn application form to the Non-depository division of the Department of Financial Institutions. They also have to pay a registration fee which does not come cheap. They then have to submit supporting documents to verify their financial standing and character.
- A comprehensive financial statement duly verified and prepared by a certified public accountant. Their aggregate net worth and liquid assets must meet the minimum amount set by the province.
- A credit report for the business.
- Written proof that they have garnered the required minimum number of years of finance related experience.
- A criminal record report from the state police where they stay.
- Reference letters preferably coming from depository financial institutions.
Only then will they be given a pawn broking license after the application has been approved.
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