Frequently Asked Questions
1. Are pawn shops regulated?
a. Pawn shops are actually a very regulated and closely monitored industry. The pawnbroking industry has been instrumental in initiating, sponsoring and working with the authorities regarding regulations. In Utah, all pawnbrokers are required to be licensed and are carefully regulated by local authorities. At the federal level, if pawnbrokers buy or sell guns, they follow the rules from the Bureau of Alcohol, Tobacco, Firearms and Explosive Devices, and are regulated by the Federal Reserve Board (RegZ and Truth in Lending Act) in much the same way as banks. Pawn shops are also required by the Patriot Act to check all customers against the Treasury Department’s database of known terrorists.
2. Are Pawn shops obsolete in this day of the internet?
a. The core business of a pawn shop has been basically unchanged for some 3000 years. Queen Isabella even used the services of a pawnbroker to finance Columbus’s discovery of America. A pawn loan is the only credit product that offers the borrower access to short term cash with obligation. In today’s world, there are so many credit options offered to consumers, but none that are as efficient, and as quick as a pawn loan.
3. Aren’t Pawn shops a last resort for people?
b. For some people, it is a last resort as they cannot get fast cash through a conventional
loan. In addition, there are two other basic types of pawn visitors. 1) The pawn hound- every pawn shop everywhere they go, always looking for a deal, and 2) people that have preconceived ideas as to what a pawn shop experience “might be.” At King Pawn, we strive on being convenient and creating a high level of trust with our pawn “friends.”
A lot of customers find that pawn loans are much more convenient and less intrusive than borrowing money from friends, family or other short term lenders. Pawn loans are confidential with no credit check and a quick way to borrow money. If the borrower chooses to not repay the loan, there are no legal consequences other than the forfeiture of the pawned item.
A customer receives a percentage of the value that King Pawn believes the collateral would bring in a sale with the loan to collateral ratio varying on the type, style, condition and marketability of the item pledged. The great thing about a pawn loan is there is no emotion . It doesn’t put distance between family and friends and doesn’t cause the borrower to overextend credit or go into bankruptcy.
b. Do pawn shops deal in stolen merchandise?
a. I don’t believe that any owner of a pawn shop knowingly and willingly deals in stolen merchandise. The risk and consequences are too great. Pawn shops are a legitimate business. They are licensed and regulated and cooperate very closely with law enforcement to minimize the “trafficking” of stolen merchandise. King Pawn will require a valid government issued ID with picture, right thumb print, and a picture to be placed on file as part of the pawning or selling transaction.
King Pawn staff will carefully evaluate the item(s) brought for sale or pawn and insure they are in good working order and all parts are complete. If the item has a serial number, it will also be recorded on the pawn ticket. The reason for these procedures is that King Pawn then has to submit this information to the Utah Central Pawn Database where the police will compare the descriptions and serial numbers against records of stolen merchandise. This is the process by which stolen items, properly identified, can be recovered and returned to the rightful owner.
Why are we so careful? If a stolen item is found in a pawn shop and the item is not reported properly and timely to the police, the pawn shop can be charged with receiving stolen merchandise. Also, if you purchase an item from King Pawn, you can be assured that you are buying legitimate merchandise. Reputation is the cornerstone of our business, and it is simply in “everyone’s best interest” to keep stolen goods out of pawn shops.
c. Why do Pawn shops have such high finance charges?
a. At King Pawn we balance a number of factors when providing a loan- the amount, duration, collateral, risk and recourse. Generally our loans are small dollar and/or short duration loans. The item that is pledged is pledged is the only collateral and King Pawn is liable for the replacement value if something happens to the item while it is in our care. There are no hidden charges as with other lending institutions.
If you have ever had the unfortunate experience of writing a check that was returned for insufficient funds, the charges are steep. For example: Bounce a $20.00 check and there is usually a posted fee charged from the store of $20.00. Then there is the initial return check fee charge from the bank, again another $25.00, and for every day that it remains unpaid, the fees continue to add up. It can very easily and quickly add up to $60-100.00 in fees for a $20.00 check if left unattended. If you do the math and catch the problem early (3days) you will only be paying 2700% in interest and penalties. You make the choice.
d. How can I get the most value for an item that I am looking to pawn or sell at King Pawn?
a. If you have a receipt for the item that validates your purchase price, bring it to the store. Have the item complete with all accessories (chargers, cables, keys, instruction manual). Just like going out on your first date make sure the item(s) are attractive and put their best foot forward. Take a few minutes to remove dirt, grime, and make it as marketable as possible.
Do some research as to what your item has sold for in your market area, but don’t compare it to something “new in the box.” Remember- the item is used and your emotional attachment to “your old boyfriend’s jewelry” makes for a great story, but adds very little to the final value.