- Are you dealing with an unlicensed pawn shop?
- Is the interest rate you’re paying your pawn shop within the legal limit?
- How does a pawn loan work?
You’ve been in business for several years and, overall, it’s been very profitable. Then out of the blue, sales drop and you find yourself not taking home a full paycheck. You wonder, “What am I going to do?”
Rest assured that you’re not alone! Many people find themselves in this situation from time to time. Fortunately, a pawn shop is a simple solution available to almost everyone.
“I’ve got some jewelry just sitting in a box under the bed,” you think, “maybe I can pawn it!” “Is there a pawn shop open near me?” you wonder. You search and maybe you realize that you have no idea what to expect in a pawn shop? You wonder, “Do they have to be licensed? Are there laws governing interest rates? How does a pawn loan work?”
- Licensure – All pawnbrokers must be licensed as a Pawnbroker. Unfortunately, there are buy & sell stores that claim to be a pawn shop, but are not licensed and should not be doing pawn loans.
- Interest rates and terms – It’s important to ask what interest rate the store is charging, because if it is more than 3% per month, it is an illegal pawn loan in the State of Michigan. Beware of the buy and sell stores that charge between 10-30% interest for a 30-day loan. According to Michigan Law, licensed Pawnbrokers are limited to charging 3% or less for a 30-day loan. Additionally, pawn loans must be valid for 90 days and 3% interest per month. Finally, a pawnbroker may charge a storage fee of $1.00 per month.
Do some research ahead of time, ask plenty of questions and make sure you understand the appraisal estimate, loan price and terms before agreeing to the loan. A pawn loan works like this:
- A customer brings something of value, an expensive watch for example, to the pawn shop. The pawnbroker appraises it and gives the customer a fixed-term loan price for the item, plus interest, and a maturity date for the loan, usually 30 to 90 days. There is no credit check, because the loan is secured by the collateral (the watch).
- If the customer agrees to the loan price and conditions of the loan, he/she receives the agreed-upon loan amount and leaves the item with the pawnbroker as collateral to guarantee the loan.
- The pawnbroker will give the customer a pawn ticket with their name and address, a description of the pawned item, the loan amount and the maturity date. The local police will also get a copy of the receipt.
- When the loan is paid, including interest, the customer will receive the pawned item back. If the loan is not repaid, and no monthly interest payment is made, the pawnbroker will keep the item and cancel the debt.
- Some pawn shops will allow the customer to extend the loan if they pay the interest on the extended loan.
Lastly, ask yourself the following questions:
- Is the shop a member of the National Pawnbrokers Association?
- Is the shop a Licensed Pawnbroker in the State of Michigan?
- Are the staff friendly, both on the phone and in-person?
- Is the shop clean? Is it safe?
- Do I know what my item of value is worth?
- Are the staff members being honest with me?
Garden City Pawn is proud to be a member of the National Pawnbrokers Association & a
Licensed Pawnbroker in the State of Michigan & in the City of Garden City.
We also have a strict Code of Conduct and a well-defined Mission Statement.
Check out this link to the National Pawn Broker Association for a list of Federal Laws that regulate the Pawn industry.
“Great place for everything you need!! Whether you’re looking to purchase just about anything or you need a little extra cash when you’re having tough times, these guys are always ready to help! Honest, pleasant and helpful bunch of guys who know how to run a legal, great business and never low ball you! They will always give you the fair value whether your buying, selling or pawning!!! Would recommend this place to everyone!!!” Tanya Moore
Are you ready to work with an honest, friendly, and licensed pawnbroker? We’re here for you!
Call or text us today!
Call: 734-525-0777 | Text: 313-215-6986