Frequently Asked Questions About Pawnbrokers

How does a pawn shop work?

Pawnbrokers lend money on items of value ranging from gold and diamond jewelry to household items, musical instruments and more. Items such as jewelry maintain their value over a reasonable period of time. Items like computers and electronics lose value over time much quicker. Customers provide collateral, eliminating the need to distinguish high-risk from low-risk borrowers.

Typically, loans are small but can reach as high as several thousand dollars or more depending on the value of the collateral. Contracts vary from state to state, but the average loan period is 90 days. In New York State, it is four (4) months. Interest rates will vary from state to state. In NYS, we are only allowed to charge 4 percent per month. Plus we charge, by law, a nominal x-care and ticket writing fee. Contact Community Pawnbrokers for specific information on fees.

The process is much the same as other lending institutions, with the primary difference being the size of the loan, the collateral and the holding of the merchandise until the interest or the loan has been repaid.

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

WHEN THE BANK SAYS NO
Pawn shops offer the consumer a quick, convenient and confidential way to borrow money. A customer receives a percentage of the value the broker believes the collateral would bring in a sale. Although the loan-to-collateral ratio varies over time and across pawn shops, a loan of about 50 percent of the resale value of the collateral is typical. In other words, pawnbrokers feel their loan is "paid in full" at the time it is made. Most states regulate pawn shop interest rates and other charges, such as storage or insurance fees.

What is the foreclosure procedure?

If a customer defaults, the collateral becomes the property of the pawn shop after the loan is overdue by a specific amount of time (in NYS, the pawnbroker must mail you a notice of the defaulting pledge). You must redeem your pledge or extend it by paying the interest due within the stipulated grace period. In case of default, some states require the collateral be sold at public auction. Thirteen states and the District of Columbia require any surplus from the sale of the collateral over the amount owed the pawnbroker, including accumulated interest and any costs related to the sale, to revert to the pawn.

Do most pawning customers lose their merchandise?

The national average is that 70 to 80 percent of all loans are repaid; at Community Pawn Brokers, our average is 85 to 90 percent. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. It is the choice of the customer to repay the loan.

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

Less than one percent of all loans are identified as stolen goods. Pawnbrokers work closely with local law enforcement. A customer must provide positive identification to show evidence of the transaction. This information can then be presented to the police department, therefore decreasing the likelihood that a thief would bring stolen merchandise to a pawn shop. It is not in the interest of the pawnbroker to accept potentially stolen merchandise because the police can seize the merchandise and the pawnshop owner would lose the collateral as well as the loaned money.

Are pawn shop rates excessive?

Pawn shop rates can be high, however, all lenders charge rates commensurate with risk, size and duration of the loan, collateral offered, and recourse. Pawn shop loans are small dollar, high risk, short duration loans. The item stands as the sole collateral, offering no other recourse. And pawnbrokers are liable for replacement value if something happens to the item in their care. Once again, in New York State, the interest rate is the lowest of the states in our nation.

Are pawn shops good places to shop?

Most pawnbrokers are mainly in the business of making loans. The items that you see on display are defaulted and can be easily bought for fractions of the original purchase prices. A keen shopper will examine the product for defects prior to purchase, but must reputable pawnbrokers will offer some sort of warranty. New jewelry outlets will hardly ever carry those different or unusual items.

Where did the pawnbroker's symbol originate?

The universal symbol of pawn broking is three gold balls and is one of the most easily recognized in the world. The Medici family in Italy along with the Lombards in England were pawnbrokers in Europe. Legend has it that one of the Medicis in the employ of Emperor Charles The Great fought a giant and slew him with three sacks of rocks. The three balls or globes later became part of their family crest, and ultimately, the sign of pawn broking.

So what actually happens when you walk into a pawn shop?

Most pawnbrokers deal largely in gold jewelry, while we also deal in cameras, musical instruments and other valuable items. Loan consultants take a few minutes to value your item and tell you how much they would be willing to lend on that basis. Many customers find the amount they are offered is larger than they need. There are no credit checks, as your item is our security. Pawn broking customers must be at least 18 years of age and have valid identification. At the end, you receive cash and a pawn contract, reminding you that the item is legally yours for at least the next four months.

After that period, we are obliged to give you 30-day final notice to pay off your loan and reclaim your goods, or extend the loan by paying the interest owed. If you fail to reclaim your item, we will have to foreclose on the loan.

Community Pawn Brokers • 718-444-2200
Cash Loans | Cash for Gold

NYC Gold Buyers • Jewelry Buyers • Electronics Buyers

Serving Brooklyn, Queens and all of NYC from four locations in Brooklyn, including our flagship Flatlands store.