You’ve clipped coupons, made seasonally-smart purchases, hit the dollar stores and bought things in bulk to save money, but you’re still looking for fresh ways to get deals. Could pawn shops be the answer to your quest to save more cash?
There are currently about 10,000 pawn shops in the United States, making them an accessible and affordable option for most Americans. So why don’t more shoppers hit the pawn store when looking for deals? Usually it’s due to intimidation – most people don’t know quite how pawn shops work, what types of deals can be found there and whether the merchandise is reliable. Check out the following frequently-asked questions that can help guide your pawn shop visits.
1. How Do Pawn Shops Work?
Many people are unsure of how pawn shops get their inventory or whether they may have to return items they bought there if the original owner wants it back, but the reality is that the items for sale in pawn shops are typically used products much like you’d find in a thrift store, but often of higher value.
“Put simply — customers pledge property as collateral, and in return, pawnbrokers lend them money,” according to Pawn Shops Today. “When customers pay back the loan, their merchandise is returned to them. Pawn loans are made on everything from jewelry to electronics. If the customer elects not to redeem his or her collateral, there is no credit consequence to the borrower and the items are sold at a value price to retail consumers.”
For instance, suppose a customer sells his used video game system to a pawn shop in exchange for a $200 loan. The pawn shop gives him a claim ticket along with the money, and the customer leaves. If the customer returns within a 30-day period and pays back the $200 as well as the accrued interest (typically about 20 percent), then he can get his video game system back. If the customer doesn’t return, the video game system ends up on the shelf of the pawn shop at a retail price set by the shop (let’s say, $350).
Therefore, if you make a purchase from a pawn shop, the item on the shelf has already been forfeited by the original owner who got the loan for the item.
2. What Deals Can You Find at Pawn Shops?
Walking into a pawn shop can be a different experience from one day to the next, since you never know exactly what you’ll find there. But in general, there are certain items you can find at pawn shops for deep discounts.
The first is jewelry, since you can get gold, silver, gems and other items at pawn stores for about 50 percent of the cost that you’d find them new. Just make sure you know enough about jewelry to be able to identify genuine jewels from fakes. Although pawn shops strive to only accept real gold, silver and gems, some knockoffs do slip through the cracks and you don’t want to buy a fake.
On my recent trip to a pawn shop, I was surprised to find the number of high-quality tools available. Sure, you’ll find everyday tools like hammers and screwdrivers for under $10, but this pawn shop also had big-ticket items such as compressors and a circular saw. When I looked up the prices of these products on Amazon and Craigslist, I found that the pawn shop prices were about 30 to 50 percent cheaper than both.
Sports equipment and musical instruments are also great to find at pawn shops. Who hasn’t tried out a new sport or musical pursuit and then given it up just a few days later? Many of the equipment for both of these pursuits can be outrageously expensive to buy new, but you can find them gently used and at up to 50 percent off at pawn shops.
Remember this: If you’re buying electronics like phones, computers, video game consoles or televisions from pawn shops, do so at your own risk. These items have not always been extensively tested, and even the slightest issue with an electronic item can destroy it. Therefore, unless you are the kind of person who can fix or rebuild electronic items without any problems, then buying these products at pawn shops might not be for you.
3. Can You Trust What You’ve Purchased?
Many potential pawn shoppers avoid visiting these stores because they’re afraid of buying stolen merchandise, but pawn shop owners say that less than one percent of all items in these stores came from a stolen source.
If you do buy something that ends up being reported as stolen, your local and state laws will dictate whether you’ll have to return it and whether you’ll get your money back.