This type of shop is one that will offer a person money for an item, generally a fraction of the value of the item. A pawn shop will buy many different things from movies, televisions, computers, musical instruments, jewelry, and more. When this transaction talks place it is called “pawning” or “pawning an item.” Depending on the pawn shop the person who pawned the item will have thirty to ninety days to redeem, or get the item they pawned, by paying back the money they were given for the item plus interest or other fee. A pawn shop cannot sell the item that was pawned before the specified date that the customer has to buy it back. The owner may contact the one that pawned the item if someone wants to buy it to see if they want to sell it.
Some pawn shops will take some items on consignment, which offering the one putting the items in on consignment if the item is only sold. The profits that are earned on the item are generally split between the owner of the item and the store. There are also some pawn shops that will offer the one wanting to pawn things the opportunity to sell their items so the shop can sell it right away. If the person decides to sell the item instead of pawning it may get more money for the item.
For anything that is pawned the shop does offer below market rates because many times people have an urgent need for money and cannot wait until the items are sold. The customer may be desperate for money to pay a bill, buy groceries or medicine, or just want money to spend so they take it for less than market value. Even when the pawn shop keeps the item because of non-payment or the person decides not to get it back the pawn shop may be stuck with because it cannot sell it or it will not sell at the price that they want for it so the pawn shop is out the money they let the person pawn it for and have an item that is not selling. When they pay less than the market value price it can sometimes help to offset any money that may have lost on items that they cannot sell.
There are strict rules in the United States that regard the running of a pawn shop and vary from state to state. Two of the rules they must follow is the percentage of the market value for which the item can be pawned and how long the pawnbroker has to wait before they can sell an item that was pawned. The laws are to protect the pawn broker and the one pawning the item.