Whether you need cash fast or have a few things to sell, there are many things to consider when choosing a pawn shop. Before you sell your items, set a hard limit on how much you’re willing to sell them for. Generally, you should aim to sell your items for 40% of their retail value or less. Other pawnshops might be able to offer you a higher price, so it’s important to know what you want.

 

Regulatory Environment

To avoid being scammed by unscrupulous pawnshop owners, consumers should check the state licensing and Better Business Bureau’s reputation before visiting a pawn shop. Moreover, consumers should be aware of several laws that govern the industry, such as the Truth in Lending Act, which requires lenders to disclose the terms and conditions of loans, and the Equal Credit Opportunity Act, which prohibits discrimination in lending.

While knowing the industry’s laws is essential, pawnshops have little centralized oversight. In most states, pawnbrokers are licensed by local governments and are subject to local law enforcement. Illinois is no different. In Illinois, pawnbrokers must obtain a license from the Department of Financial and Professional Regulation (IFPR). 

 

Loan Terms

When applying for a pawn loan, it is crucial to know the loan terms. Pawn shops like Auto Pawn generally offer 25 percent to 50 percent of the resale value of the collateral. When calculating the amount of money lent, keep in mind the expenses of storage, cleaning, repair, advertising, and general overhead costs. Pawnshops also generate income from retail sales, including items purchased from individuals and pledges as collateral. If the loan customer defaults on loan, they lose the pledged collateral property to the pawnshop.

 

Interest Rates

The interest rates at a pawnshop vary widely. Other pawnshops may charge a maximum of $5 per month. Interest rates at a pawn shop are slightly higher than average but can be reasonable for collateral loans. The repayment terms are also flexible, so a pawnbroker may be able to offer you the perfect loan term.

Another advantage of a pawnshop is that they usually give out more money for a given item. This is because they know that the item is immediately resold and can project profit margins more accurately. Some pawn shops don’t even list their interest rates. Instead, they list their fees, and the interest will vary depending on the item’s value and the loan’s length. Therefore, opting for an installment loan is best if you’re looking for a short-term financial patch.