Pawning Stuff? What You Need to Know

April 26, 2009 by Administrator 


The San Diego Union Tribune has recently published an article with tips for pawn shop goers in San Diego. A sampling of the nespaper’s valuable tips includes:

1) You’ll need to identify yourself. Be ready to show a driver’s license or state identification, give a thumb print and have your photo taken, along with a photo of your collateral. You’ll also need to supply some personal information and details of the item being pawned. This information will be sent to local law enforcement.

2) You don’t need a credit check to get a collateral loan. There are no legal consequences if you don’t repay the loan; it won’t hurt your credit rating or cause you to go into bankruptcy.

3) Your loan time is limited. California law says you have four months (plus a 10-day grace period) to repay your loan, along with interest and ticket-writing fees. If you don’t pay off your loan in that time, you either forfeit your collateral or rewrite your loan (pay the interest due and then begin a new contract using that same collateral).

4) Your valued possessions may not be worth as much as you think. Just because you paid $8,000 for a diamond ring five years ago, doesn’t mean that’s its current market value – especially in a pawn shop. You receive only a percentage – usually between 20 percent and 50 percent – of the value the broker believes the collateral would bring in a sale. Pawnbrokers use online sources such as eBay and Google to determine how much an item is worth.

5) It pays to negotiate and shop your merchandise around. Most pawnbrokers expect customers to try to bargain for a larger loan on their collateral.

6) Pawn interest rates and fees aren’t excessive, but they can add up. The interest rates are regulated by the state and vary depending on the size of the loan. If you bring in a watch as collateral for a $100 loan, for example, it will cost you $115.50 to pay off your loan within 90 days. That includes $12.50 (a fee set by the state), a $3 ticket-writing fee (set by the pawnbroker, not to exceed $10), plus the $100 loan amount. If you don’t pay off the loan for another month (remember, you have four months), you’ll be charged an interest rate of 2.5 percent on the loan and fee amounts for that last month.

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