Let’s start off with what a pawn shop is not. It is not a retail outlet, nor a thrift store. Items are sold in the shop to the public at what are already heavily discounted prices.
There are three things a pawn shop does: it buys stuff, it sells stuff, and it offers loans to their customers on their stuff. Everything else is just a part of and is related to these three things.
We’ll look at the most obvious two: buying and selling. Because a pawn shop is a business, and therefore is working to make a profit, it follows the rules followed by all businesses: bring more money in the door than what goes out the door! Keeping that in mind, it should be realized that a shop won’t buy something for the same amount that it will sell that same item for. It has to make enough to not only pay for rent, utilities, taxes, etc, but for employees, supplies, and inventory (through both buys and forfeited pawns … more on those later!). What is true for stocks is true for small business: buy low, sell high!
Which brings us to the main function of a pawn shop: PAWNS! I mean, it’s in the name, right? But, one may ask, What is a ‘pawn’? A pawn is a loan provided from the shop to the customer using an item or items of the customer’s as collateral. That item (or items) is then held by the shop until the loan is repaid by the customer, along with accrued interest, or is surrendered to the shop, or what is known in the biz as a ‘forfeit’. When a customer returns to pay the pawn they have the option of Renewing or Redeeming. If redeeming, the customer pays the loan and interest in full and the shop returns her or his stuff. If renewing, the customer pays only the interest and the loan is extended for another period (3 months in Arizona). At the end of that period the customer can redeem or renew again for yet another period. We understand that times can be difficult, and some times even more difficult. We will work with our friends in those times when they may need some extra time to try to ensure they can keep their stuff. We like them, not their stuff!
There is one part of a pawn that no one really likes: the forfeit. When a customer does not pay their loan or extend by paying the interest, the loan defaults and the item or items become the property of the pawn shop. A shop will try to work with a customer if they need more time, but sometimes things go south and forfeits happen. We don’t like it, but it is a reality. Again, we don’t like to take people’s stuff and would rather have them come back and do more business with us.
For either buy or loan, a shop will do its best to provide what value is possible to those who want to sell their stuff. A major reason: we want our customers to come back! If everyone got ripped off, nobody would come back, right? Pawn shops will work to help those they can, hopefully in a manner that will help the customer meet their goals as well as keeping the lights on and the door open! While not all items will be accepted at any given shop, keep checking around. Another shop may want it. A shop will cater to its community. One shop may specialize in tools, another in guns, while another may deal mostly in musical instruments. Keep looking, keep checking, and remember … they’re not all out to get you!