Lately, there are more and more pawn shops around and seems like they get enough visitors. Is it a legit place to buy stuff at a discounted price or it’s a shady place and you should stay away from it? That is the question we will answer in this post and let you know what to buy at pawn shops and what to avoid. Also, after reading this article, you should be able to know the following sub-topics comprehensively:
- What pawn shops are
- Pros & Cons of Pawn Shops
- What you should buy at a pawn shop?
- What you shouldn’t buy at a pawn shop?
- Also, a few tricks about pawn shops.
What are the pawnshops?
A pawn shop is a business set up to loan money to people. However, these persons receiving the loans are to bring their valuable items which they leave with the pawnbroker (a pawnbroker is the owner of the pawnshop), in place of the money lent. Valuables referred to in this context include pieces of jewelry, gold bullion, precious stones, musical instruments, cameras, high-resolution televisions, etc. Some pawnshops may specialize in certain items as collateral.
So, alternatively, we can say that a pawn shop is a platform where the collateral loan is practiced.
What pawn shops are not?
So, there are many true and untrue rumors going around the pawnshops. However, it is quite unfortunate that most of these rumors are untrue, and shouldn’t be paid attention to.
Pawnshops aren’t a shady, scary or sacred place that many people picture and describe. Instead, this business is accredited both by the state and the federal government.
In fact, pawnshops are being regulated by 14 federal regulations, as well as numerous local and state laws. These facts were culled from the Spokesman for the National Pawnbrokers Association (NPA), Emmett Murphy.
These regulations include:
- Truth-in-Lending Act
- USA Patriot Act
- Bank Secrecy Act and IRS regulations requiring reporting of certain cash transactions
- Trading with the Enemy Act and related Executive Orders and regulations
- Privacy provisions of the Gramm-Leach-Bliley Financial Services Modernization Act
A pawnshop is a recognized business by both the federal state and local governments. However, just as in any business there are many, not trustworthy pawnshops. Wherefore, the reason spokesman of NPA advised all prospective borrowers to look up the NPA’s official site for accredited pawnshops nearby.
Having understood what a pawn shop is, and what it is not, the next question would be how does a pawnshop operate? This is quite simple and close to what we’ve already described. The working principle, as afore-mentioned, is based on collateral. As a customer, you give your property to a pawnbroker as collateral to borrow money from them. However, upon payback, with the fulfillment of agreement during borrowing, your collateral is returned to you. These loans are placed on anything valuable, ranging from precious stones to pieces of jewelry, and even useful electronics. This all depends on the amount of money you want to borrow. However, in cases where you fail to pay back the loan, you automatically lose ownership of your belongings to the pawnbroker. These items are sold at a value price to retail consumers. And that is all! This is the whole process involved in borrowing money from any pawn shop nearby.
A potential borrower must pay keen attention to all terms of the contract. One bad thing about pawnshops is that they offer loans at a high rate, payback terms are very short term and you can lose your collateral. Noteworthily, over 80% of items given as collateral are reclaimed by the original owner. However, this doesn’t mean pawnshops do not lend larger amounts at lower costs within flexible periods.
Additionally, short-term loans from a pawnshop are highly regulated. Their terms of business are stated clearly in a contract.
So, we can surely say that pawnshops are better for short-term loans when you do not qualify for a bank loan or loan from a credit union.
That is from a borrower perspective — one, who seeks to get a loan from pawnbrokers. However, as a neutral person who has no intent on getting a loan but instead to buy. There is stuff you need to be aware of; certain precautions to take when dealing (buying from) with these shops. That is the main section of this article. So, let’s get into it!
6 Things You Should Buy From a Pawn Shop
Pawnshops are places where you can find virtually anything. Thanks to the flexibility of the business, which accommodates all kinds of collateral. However, despite the wide range of product varieties and types, don’t just buy anything you find at a pawn store even if it looks like a good deal. Below are a few products you can or should buy from pawnshops.
Mainly because of the cost analysis involved. One of the best items to buy at pawnshops is jewelry. You can find pieces at a half-price compared to the original retail price tag. Some people might have issues purchasing used pieces of jewelry, but it shouldn’t bother you. Most retail stores are reusing diamonds from other rings and melting old gold pieces to make new ones. Buying jewelry at a reduced price yet with the same metal and stone at a pawn shop near me is a better option than getting it at retail price. Besides, if the jewelry piece you bought isn’t shiny, you can ask any jewelry store to do maintenance and polish it. In most cases, it will be free or very cheap. However, you need to be cautious when buying jewelry from pawnshops. Make sure the piece is made of the advertised metal and stone because all purchases are final and you don’t want to be left with a fake jewelry piece.
Most people go to pawnshops to find great quality products at reduced prices. Tools are the kind of items to look for. Buying brand new tools at retail can cost a fortune. If you’re not professional you probably wouldn’t use these tools very often and paying the full price just doesn’t make any sense. So, in this scenario, any nearby pawnshop would be a good option to buy good tools at a fraction of a cost. Unlike other items, you can’t buy a fake or misrepresented tool.
3. Musical instruments
Getting a brand new musical instrument straight from a specialized store is a very expensive purchase. However, getting the same or similar instrument from a pawnbroker would cost you a ton less. An average pawnshop employee won’t know the real value of a certain instrument, so if you’re lucky, you can find the Stradivari violin for the price of Teekland. But seriously, there are great deals to be found. So, if you or your child is just getting into playing the violin, pawnshop would be a great place to get a decent instrument and not break a bank.
This is another great item to buy at pawnshops. This alternative transportation type can get very expensive, especially if you’re going for a great brand with a history behind it.
I like cycling and know a few things about bikes. I can tell you that I’ve seen some great bikes with top-notch components at local pawnshops. They aren’t super cheap, but still more appealing than the retail price.
5. Game Consoles
There are a lot of game consoles in most of the pawnshops. As the new console is released, people sell their old ones and go for the new one. In many cases, they retain their original condition at a half-price. Should the console be in good condition, and has been tested and trusted to be okay, then it is a great buy. As you would be getting it for almost half the price, yet in a great working condition.
Used DVDs should not cost more than $2-$3 at a local pawn shop. Crazy, isn’t it? And that is for a tested and in perfect working condition disc. Most of the time they’re pre-inspected before being purchased by pawnshops, but it won’t hurt if you inspect it yourself and make sure there are no scratches or any other physical damage. Also, old movies that you might not find any more in stores could be found at pawnshops. If you buy them in bulk, you can get an even better price, just negotiate with the seller.
5 Things You Shouldn’t Buy from a Pawn Shop
In this part, our focus isn’t on the cost, but the quality, usefulness, and credibility of used products. You might be having thoughts that some goods are not to be bought at pawn shops because it might be a stolen item. Well, that is true! Pawnshop laws and regulations can’t always work with100 percent accuracy. Most pawnbrokers don’t ask for proof of purchase before buying, so chances are there are some stolen items on the shelves. Below are just some items that have a high stealing rate. It doesn’t mean that all these items in pawnshops are being stolen at some point, but its good to know to be cautious.
1. Laptops and tablets
These items are a no-go or are be very cautious before buying at a pawnshop. They could be at a very great price but it might have a few problems. First of all, they could be stolen. It might not affect the quality and condition, but who wants to pay for a stolen item? Most new devices require registration upon use and that is for loss or theft protection. If one of these items is stolen an owner can report it and this device is going to get blocked. Meaning you won’t be able to use it unless the manufacturer unblocks it with the permission of the registered user. If the device is set to default settings or battery is dead there is no way to know much about the item. Some devices have the option to run an online check, but it requires a serial number or other identification code. Another situation is that an electronic device can be partially malfunction. Pawnbrokers don’t test all their units thoroughly so they might not catch some broken buttons on pixels.
2. DVD & Blue-Ray players
Unlike DVDs, players are considered a don’t buy from pawnshop items.
These items can have so many issues if not checked thoroughly. Overall, it is not advised to get anything tech-related at pawn shops, as it is always a gamble and more like a game of probability. It might work properly, and it might not.
This has the same story as the previous item. Technology related items are a no-no at pawn stores. If you do not want to put your funds to waste intentionally. Also, asides that, most pawn shops do not even accept mobile phones as collateral. This is because this device is the most stolen, and thus, the credibility of ownership cannot be 100% confirmed. However, if you find one don’t buy it because it can have the same issues as laptops or tablets described above.
4. Vacuum Cleaners
Asides from the functionality risk involved, hygiene is more important in this case. You do not know where and what the vacuum has been used for. And by making use of this kind of vacuum, you might end up letting germs into your house. So, hygienically-wise, it is advisable to get new vacuum cleaners, irrespective of the cost.
Asides the electronics mentioned in the previous section, I do not advise you to purchase any other electronic product at pawn shops. You are likely going to be scammed. Electronics such as TV’s, Cameras, GPS navigation systems, home theaters, are a no-go area at pawn shops. Unless you are a great technician and can make sure that the item is 100 percent functional.
Moving along, let’s run a final check of the tactics you can employ if involved in a deal with a pawnbroker. Asides from having reliable negotiating skills, certain tricks might work! Let’s talk about these tricks.
1. Do not disclose where you got it*
If you ever find yourself needing to pawn an item, this will be helpful. The first mistake you will not want to commit is telling where you got the product. Don’t get me wrong here, I’m not saying this if the item is stolen. However, if you got the item on a garage sale, craigslist or as a gift it can drive the offer amount significantly lower compared if they assume you got it brand new. This can be your marketing strategy to sell your item for a better price. If the pawnbroker knows that you didn’t pay the full price for the item you’re trying to pawn, they will try to low-ball you.
2. Don’t disclose the cost
Very similar to concealing the purchase origin of the product, never tell the amount at which you got the product. I think this is quite logical. You can’t walk into a car lot and ask the dealer to tell you the amount they got the car for. You can tell the price only if the pawnbroker is offering a way to low and you want to use the original price as leverage to bring the offer up.
3. Let them make the first order
This is a trick for negotiation; the one who states the first number ends up losing, in most cases. The point of the game is everything that is put up for sale with a price tag, has to be compromised by a lower price, by the price you’re willing to pay. Or whatever you’re trying to sell, you need to get as much as possible for it. Here is an example: Let’s say a specific product I plan to pawn for $500 as the final price. If I go first to mention the price, I would be at a loss because now there is no chance to negotiate. Nine out of ten pawn dealers would want to get your product at half the price you mention. That is why we encourage you to wait for the pawnbroker to go first. This would give you an edge in the negotiation process.
4. Make the first move to leave
If the negotiation process is taking nowhere and you feel like they want to take an advantage over you and low-ball you, leave or make it seem as you’re about to leave. Here is the thing, pawnshops are not ready to offer their potential customers the best offer they are willing to pay or sell. So, you can simply say – you’re not satisfied with the deal and you will get a better deal elsewhere. This will let them know that you will leave if they don’t improve the deal and they will give you their final offer.
As the final takeaway, there are good and bad things about pawnshops. If you are visiting a pawnshop nearby as a buyer, make sure you inspect the item you’re trying to buy and make sure it works. To protect yourself from being taken advantage of, do not buy the items we have listed in this post. If you’re trying to sell something to a pawn shop, don’t agree with the first offer they make. Try to negotiate and in most cases, you will get more out of them.
We hope you find this post helpful and it will save you time and money. Also, let us know about your experience with pawn shops.