The Inside Goods On Pawn Brokering

By: N. Messe Click author's name for more of his/her articles

After you have tried all the tricks to keep the bill collectors from pounding on your door, it might be time to visit a pawn broker. The word "pawn" is derived from the Latin word 'Pignus', a type of pledge used to secure a loan. For centuries stretching back to ancient Roman times objects or possessions owned by one person were used as security against a loan made from another person. In such arrangements the lender can take possession of the pledged objects if the repayment conditions are not met.

This is essentially how pawning works today. The pawn broker offers loans to people who have relatively valuable items of personal property that can be used for collateral. The contract with the pawner specifies that the pawn broker has the right to sell the item and keep the proceeds if the loan is not repaid according to the conditions outlined in the contract.

The pawner - person whose item has been pawned - has the right to purchase back the item previously pledged to the pawnbroker. But only within the agreed upon contractual period, and only by paying the amount of the loan plus an agreed amount of interest. In cases where the pawner fails to purchase back the collateral within the specified time, the pawn broker has the right to sell it off and redeem his money.

The pawning process begins when you bring an item as collateral to a pawn broker and they assess the item for its condition and sales worthiness by testing it and examining it for flaws. Pawn brokers do not accept everything that is brought to them. In fact they normally turn down items that they think will be difficult to sell.

This type of transaction does not come without a price. The rate of interest charged by a pawn broker is very high and in some cases you may actually end up paying as much as three times the assessed value of your item.

The good news is that it is easy to get a loan by going to a pawn broker since most folks are bound to have something of value they can pawn for easy money. Typical items include jewelry, electronic gadgets, musical instruments, gold, silver, and platinum.

The pawn broker has to bear a certain amount of risk since the item pawned could be a stolen one. In many cases there is no practical way the broker can verify it is legitimately owned by the pawner. In some countries, the pawn broker is required to verify the identity of the pawner, but the risk remains because verifying the legal ownership of an item is often more difficult than it is worth.

To assess the value of specific items, brokers make use of different resources. There are traditional blue books and other guide books which give estimated values of various items. They also resort to internet search engines, and look for prices of similar items on auction sites like eBay. In some cases establishing a price comes down to experience and intuition.

The pawn broker decides the amount of loan to be given to the pawner depending upon various factors like the possible resale value of the collateral, the availability of similar items in the market, and the likelihood that the pawner will pay the interest without fail.

The usual circumstances that lead a person to resort to a pawn broker are pretty obvious. Typically a person who uses a pawn broker has no access to normal credit sources such as bank loans or credit cards. Their personal situation and credit ranking do not allow them to get those more traditional loans.

From the credit report point of view using a pawn broker has some advantages. Unlike other lenders, pawn brokers do not report a defaulted loan on the customer's credit report since they already have physical possession of the collateral and can sell it off to redeem their losses. In effect they operate outside the mainstream credit system and have no particular interest in participating in it.

Perhaps you need just a one time loan. Pawning helps you avoid the usual spiraling debt cycle as the defaulting loan is immediately recovered against the collateral pledged. Pawning is also ideal if you have a movable asset to pledge - such as a musical instrument or piece of jewelry - rather than an immovable asset such as a house or piece of property. The fact is, you'll almost always get a loan from a pawn broker against anything that has resale value.

When you need a loan quickly, pawn brokers serve a really valuable purpose. They do not require you to go through the long and tedious procedures that regular lending agencies require. They don't care about your credit worthiness, and they don't hassle you for repayment. As long as you are willing to part with something of value a pawn broker is prepared to turn it into cash.

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About The Author: In Long Island and Nassau County turn your valuables into cash by contacting Empire Pawnbrokers. Nassau County NY sell gold is the easiest way to turn your gold, jewelry, diamonds and other valuables into instant cash.