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How does a pawnshop work?

People often need to borrow small amounts of money that other lenders are not willing to provide. This has caused the popularity of pawn shops to rise. What chance do you think you would have getting a $300.00 or smaller loan from a financial institution for a 30 to 90 day period? The cost of the paperwork alone makes small loans like this unprofitable for them to make on a regular basis. Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to musical instruments, televisions, tools, household items, etc.. These items maintain their value over a reasonable period of time and are easy to store, especially jewelry. All customers provide collateral, eliminating the need to distinguish high risk from low risk borrowers. Typically, loans are small, averaging between $70 and $100. They can be as small as $10 or as high as several thousand dollars, depending on the value of the collateral. Contracts vary from state to state, but the average loan period in Virginia is one month. Loans can be renewed monthly. All fees are regulated by the state.

Why would someone go to a pawn shop to get a loan?

We offer people a quick, convenient and confidential way to borrow money. A short-term cash loan can be made with no credit checks and no legal consequences if the loan is not repaid. Pawnbrokers, also known as collateral loan brokers, make loans based on the value of the collateral. Checking the customer's credit history is not necessary because they are leaving their property to cover the amount of the loan. If the loan is not paid off or at least the monthly charges paid during the specified term, the item is forfeited and may be resold by the broker to recover their costs.


Can you explain a typical transaction?

A typical transaction begins when a potential borrower brings their property into our shop for a loan. We then determine how much to loan the customer. The amount of the loan offered is based on the resale, or secondhand value of the item, not the new price. There are some items that cost a great deal new, but as a specialized item, they are extremely difficult to resell and therefore receive a low loan value. There are some very popular items that attract a high price and therefore the loan value will be much closer to the new price of that item. Loans are paid out at a rate of about one-third to one-half of the price the we can expect sell the item for during the worst of times. This assures that a profit will be made. Often the customer prefers to sell their property or trade it for an item for sale in our shop. We offer more money in this case, because we do not have to provide storage for the item while it is in pawn.


Do I need Identification?

The state requires us to use only a state issued drivers license or state photo ID card as identification each time a customer sells or pawns an item. We may know you personally, but that does not exclude you from showing your identification at the time the transaction is made. We are required to check for updated information on every transaction. A complete description of the customer and all items received by a pawnbroker must be reported to the police daily. They compare pawned and sold property to their burglary, robbery and theft reports.


What is the foreclosure procedure?

The customer defaults on the loan when the loan is either not paid in full, or the monthly charges paid by the due date. After a two week grace period, the collateral becomes the property of the pawn shop and can be sold.


Do most customers lose their merchandise?

On average, 70 to 80 percent of all loans are repaid. Repeat customers make up most of our business. We know most of our customers because they often borrow against the same items regularly. If the borrower chooses not to repay the loan, or pay monthly charges, we must try to recover our investment from the item left in pawn. We prefer that customers return for their property.


How can I be sure the merchandise I purchase at a pawnshop isn't stolen?

Items for sale in our pawnshop are either new or previously owned. Everything pawned or sold to us is described in detail along with the required information from the customer's identification, in mandatory daily reports to the police. Our video surveillance equipment also verifies customers' identities. Any property that is stolen is returned to the owner.


What is the difference between buying at a pawnshop and buying at a retail store?

Mainly price. Pawnshops can offer you merchandise ranging from 1/3 to 1/2 off retail prices.


How has the image of pawnbroking changed since the 1930s?

Pawnshops today range from a single or multi-store operation to publicly held company chains. Today's you can see our family owned ROCKWALL PAWN is constantly upgrading everything from the interior and exterior of our shops, employee presentation, customer service, signage, marketing and merchandising approach. We focus on providing exceptional customer service and are very active in the community, and in local charities.


Are pawnshops a "bad times" industry?

Regardless of income level, most people periodically borrow money. In good times, customers are more able to repay their loans and have more money to buy merchandise. Pawnshops can survive bad times if they make adjustments both at the retail and loan counters, but do far better in good times. In hard times, customers have less ability to repay their loans. The value of all merchandise goes down because major retail discounters sell for less. If they sell for less, pawnbrokers must loan less thus earning a smaller return.


Do pawnshops attract indigents and derelicts?

Absolutely not. Indigents and derelicts have no assets to use as collateral or money to spend. Our typical loan customer is employed, lives in or near Rockwall, and occasionally needs short term cash. The only things our retail customers have in common is that they like variety, and they love a bargain. Many of our customers are repeat customers.


Are there firearms at pawnshops?

We are registered firearms dealers, as are most pawnshops. We must comply with Federal (ATF), State and Local regulations. These regulations require a person to be 21 years old to purchase a handgun and 18 years old to purchase a long gun. All transactions require us to keep permanent records for law enforcement agencies. We provide a unique public service by taking guns as collateral for loans. We have the only type of business that actually takes guns out of circulation and keeps them locked away in secured, alarmed vaults. There are an estimated 1.5 million secured firearms in pawnshop vaults across America.

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