Currently, 63% of Americans are living paycheck to paycheck. It’s not always possible to cover all of the expenses until the next paycheck arrives. In uncertain or difficult times — like this pandemic — you may need extra cash quickly to keep bills from piling up.
Even if you aren’t in a financially dire situation, there may be another reason that you need some cash fast. There are many ways to make cash fast, and pawning items is a good one.
What Does a Pawn Shop Do?
The term “pawn” is sometimes used to mean selling something to a pawnbroker, but “to pawn something” actually means to use that item as collateral on a short-term loan.
If you’re thinking of pawning an item, you’ve probably already looked into gig work or personal loans. If those options are unavailable to you for whatever reason, then pawning items you have might be a better alternative to letting a bill lapse or a payday loan.
Tips for Selecting a Pawn Shop
However, finding the right pawn shop for you and your item can be stressful on top of an already difficult situation. You may follow these two simple rules when selecting a pawnbroker:
- Don’t do business if you feel uncomfortable.
- Check for a pawning license.
These rules are the bare minimum if you have to get out the door right now. Otherwise, keep reading for details on these two rules and six more tips to find the right pawn shop near you.
1. Find Ideal Pawn Shop Locations
Before you can decide if you want to do business with a pawnbroker, you need to actually find some. The best place to start is to ask friends, family or colleagues for recommendations and locations. You may not know anyone who has used a pawnbroker before. In this case, the best way to find a pawn shop near you is to use the internet or Google Maps locator.
On your smartphone, use your map app of choice and use the search term “pawn.” This will bring up several stores near you. Check their reviews. Try to avoid any pawn shops that recently opened, recently changed management or owners or have bad reviews. Especially, avoid pawn shops that the reviews say are unprofessional.
After you’ve chosen three or four stores — if that many are available to you — give them a call before venturing out. Sometimes you can tell over the phone if a business’s style will match yours.
2. Only Do Business When You Feel Comfortable
Even if you have a looming bill and are feeling pressure to get the money, do not ignore your instincts. Pawn shops, like any store, should provide you with professional customer service so you have a good experience and want to return. The staff should acknowledge you when you come in and should not make you feel like your business is an inconvenience.
3. Check Pawn Shop Licenses
Pawn shops are required to have several licenses, depending on their state or local municipality and what they choose to accept. These licenses tell you that the establishment is legitimate and follows regulations. Operating a pawn shop without a license is illegal.
If a pawnbroker has all the right licenses but they aren’t more than happy to show their licenses to you, theirs may not be the kind of pawn shop you want to be beholden to for your loan.
4. Check for Interest Rates and Other Fees
Pawn shops are allowed to charge huge interest rates. Some states cap the interest rate that pawn shops are allowed to charge, but that doesn’t necessarily mean they are protecting the consumer. For instance, Texas has a cap of 240% APR on loans up to $222.
Good To Know
Pawn shops can also charge fees for processing or storage. Ask the pawnbroker about these fees before handing over your item. If they are not open about the fees they charge, however, then their fees may be much higher than the standard.
Some pawn shops include these fees when calculating their advertised APR, but many do not. You can take this into account when deciding if you can afford to pay the loan back. Once you sign your item over as a collateral but you can’t pay the loan back, then know that your item is gone.
5. Ensure Proper Storage of Your Item
Make sure the pawn shop you choose can securely store your item. If your item is precious metal, jewelry or another high-value item, make sure the shop has a safe for storing your item and applicable insurance to cover for the loss of your item or damage to it. Firearms also need to be stored in a safe, both for their protection and the protection of the staff.
6. Make Sure That the Staff Is Upfront and Honest
When you are browsing a pawn shop and its staff doesn’t seem completely honest, you should take your item elsewhere. Research the price of your item online before taking it into the pawn shop. Ask questions about it.
Wanting to help a potential customer is good service. A pawnbroker may not give you all the details, but if they refuse to give you any reason or explanation for their valuation, then you might want to question their decision; especially if their quote significantly differs from what you found during your research.
This falls in line with the first rule, but it’s worth repeating again: If the staff of a pawn shop doesn’t seem upfront and honest or it seems sketchy in any way, don’t do business with that pawn shop.
Being in a position to consider getting a pawn loan is stressful. If you follow the above rules and tips, you will find a pawn shop near you that you may feel good about.
When you repay your loan and get your item back, it’s time to make a budget you can live with to hopefully avoid living paycheck to paycheck in the future.
Banks, ATMs and Other Services Nearby
- Nearby banks
- Bank of America
- Capital One
- Navy Federal Credit Union
- PNC Bank
- TD Bank
- U.S. Bank
- Wells Fargo
Information is accurate as of Aug. 15, 2022.
Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.