The Rules of a Full-Service Pawn Shop

Whether you’re looking to buy something or pawn something, this is a place to find deals. But it’s also a place where the rules can be fuzzy. Here’s the scoop:

Generally, full-service pawn store bring an item of value into the shop (jewelry, electronics, tools, etc.) and the pawnbroker offers you cash based on its current resale value. If you choose to get a loan, you sign a contract with a specific amount of time – usually 30 days, but it can vary by state law – and interest rate. You have to pay back the principal and the interest within the time period or else forfeit your goods to the pawn shop.

Pawn shops are regulated at the federal, state and local levels. In addition to the Equal Credit Opportunity Act, the Truth-in-Lending Act and other regulations, most pawn shops must be licensed. And they’re required to check ID and record an accurate description of the goods. They’re also prohibited from discriminating based on age, gender, race, religion, national origin or marital status.

While a short-term loan at a pawn shop can help with an emergency expense, it comes with high interest rates that are often more than what you’d find on a credit card. Before you head to the pawn shop, explore these alternatives: