Q:

How do jewelry pawn shops work?

A:

Quick Answer

A jewelry pawn shop offers a way to obtain a loan without approval. In order to obtain the loan, the borrower goes to the pawn broker and asks how much the shop is willing to give him for his jewelry. If he agrees to the broker's offer, the borrower receives the money with the understanding that the broker can sell the jewelry if the loan plus interest is not repaid.

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How do jewelry pawn shops work?
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Full Answer

The process of obtaining a pawn shop loan is simple. The potential borrower presents a fine piece of jewelry, such as a ring, necklace or bracelet, to the pawn shop broker. The broker offers to pay the borrower a certain amount for the jewelry. In return for pawning the item, the borrower receives a ticket that details the amount of money loaned and the amount that is due in a certain number of days, typically 30, in order to retrieve the jewelry. The jewelry acts as collateral during this time period.

After 30 days, the borrower can choose to do one of three things. He can pay the loan back plus interest and retrieve the pawned jewelry. He can also extend the loan another 30 days, paying any additional interest and fees, or he can do nothing at all. If the borrower chooses not to pay off the loan, the pawn broker can sell the jewelry and make a profit on the transaction.

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