Frequently Asked Questions
How does a
A pawn is
another term for a collateral loan. Pawnbrokers lend money on items
of value ranging from gold and diamond jewelry, musical instruments,
televisions, electronics, tools, household items, firearms, and more.
Some pawn shops may specialize in certain items. Loans are based on
the value of the collateral. When a customer pays back the loan,
their merchandise is returned to them. A customer may also choose to
surrender your collateral as payment in full. Pawn shops may offer
someone go to a pawnbroker to get a loan?
offer the consumer a quick, convenient and confidential way to borrow
money. A short-term cash need can be met with no credit check or legal
consequences if the loan is not repaid. Pawnbroking imposes a
discipline on the borrower that other lenders do not. Pawn loans do
not cause people to overextend credit or go into bankruptcy.
How much should
I expect for a loan on my item?
vary according to the value of the item. There is no minimum dollar
amount allowed on a pawn transaction. You will find some shops
offering pawn loans as little as $5.00 or as much as
$100,000.00. Your loan amount will be determined according to other
factors as well such as demand and condition of the item. Not all
pawn stores are the same and price will vary.
How do you
determine the value of the item?
Pawn shops base
the value of the item on current appraised value, its current
condition and the ability to sell the item. Pawnbrokers use research
tools that they have at their disposal to determine an item’s value
and get you the most money for the item. The appraisal process varies
depending on the type of item—for example, jewelry is evaluated
differently than a DVD player. All items that pawn shops buy or pawn
are tested to ensure that it works properly.
How can I be
sure the merchandise I purchase at a pawn store isn't stolen?
Less than half
of one percent of all pawned merchandise is identified as stolen
goods. That’s because customers must provide positive identification
and a complete description of the merchandise. This information is
then regularly transmitted to law enforcement, which dramatically
decreases the likelihood that a thief would bring stolen merchandise
to a pawn store.
are governed by all of the major federal laws that apply to entities
designed as financial institutions. The federal laws that regulate
the pawn industry are Patriot Act, Truth in Lending Act, Equal Credit
Opportunity Act, as well as Data Privacy and Safeguard of consumer
information as part of the Federal Trade Commission (FTC) Rules. Pawn
shops that deal in firearms are regulated by the Bureau of Alcohol,
Tobacco, Firearms and Explosives (ATF). Pawn shops may also be
Federal Firearms License holders. States have regulated the pawn
industry for decades, and most pawnbrokers are licensed and regulated
by local authorities as well.
customers enjoy the same protections under federal law that customers
of other financial institutions enjoy?
transactions are the only type of consumer credit that requires
reporting to local law enforcement agencies. In many states this
reporting is required daily, and must include extremely sensitive
personal information about the consumer (i.e. ethnicity, gender,
address). Much of this information qualifies as “non-public personal
information” under federal privacy law and is entitled to protection
Do most pawn
customers lose their merchandise?
about 80 percent of all pawn loans are repaid. Repeat customers make
up a majority of the business, similar to any other lending or retail
establishment. Pawnbrokers establish relationships with their
customers because they often borrow against the same items
repeatedly. 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.
Are pawns rates
No. To provide
their service, all lenders must charge rates commensurate with the
size and duration of the loan, collateral, risk and recourse. Pawn
transactions are small-dollar, short term loans with no hidden
Ohio, rates for a pawn loan are
strictly regulated. The charge for a pawn loan is limited to a
maximum of five percent per each month or fraction on the amount
borrowed, plus four dollars per each month or fraction for storage.
I have heard that
Ohio pawnbrokers must take
Continuing Education. Is this true?
Yes it is. At present,
Ohio pawnbrokers are the only
pawnbrokers in the nation that are required by law to fulfill
continuing education requirements. Much the same as doctors, lawyers
Ohio’s Pawnbrokers and their
employees (depending on the number of employees a shop has) must
attend State approved continuing education classes.