You are possibly curious about the origin and survival of pawnshops globally. Why and how did they emerge? What is the power behind their existence? Why do they skyrocket in the present? Yes, this article is a solution to your unnumbered questions. They first emerged in China over 3000 years ago, intending to help people get an instant cash loan. A pawnbroker sets-up a shop to give out cash loans in exchange for collateral (valuable item traded for cash) for a given contractual period. The commonly traded goods are jewelry, electronic gadgets and musical items. 

How do they operate? 

The fact is a pawnbroker is a business-driven individual. They sell or buy goods/items and offer loans to their customers to make a profit. Of course, there are other means of getting loans, from banks or loan offices, but why will an individual prefer a pawnshop? They are almost the best option to choose from when you need instant cash. You only need to surrender your collateral to the pawnbroker and luckily walk out of the door with liquid cash. 

Your collateral may be very precious but situations may force you to trade it. The most important to note is the money value of your item. How much is its worth? If you are not able to predict, then search for a similar item online and approximate its cost. It is from the current cost of your collateral that you will base your agreement with the pawnbroker. 

A pawnbroker will offer you a 20-60% cost of your item as a loan and holds the remaining portion for security.  A period (usually a few months) is allocated for your payback and this will include additional interest charged by the broker. After making such payments, you are sure to get back your item. 

What happens when you default on your loan? 

Here comes the sad part of engaging a pawnshop. If you are not in a position to repay your loan in time, within the contractual period, then be sure to lose your collateral. Unlike banking institutions, a pawnbroker has the right to sell your item to other customers. It is from the sales that they will get their refund.  

Then do such shops help?  

Pawnshops are considered refuge to the stranded poor people. Does this make sense? To some extent yes. From statistics, mostly unemployed individuals engage in this business. The problem is to get instant cash; therefore, such shops have been of help to society. However, from a different perspective, must you lose your item at a cheaper cost? This results from the hard bargain you will go through with a pawnbroker. Thanks to pawn organizations that have come up to affect pawn policies in this industry. 


The present pawn industry is very promising in the market. There is nothing to worry about, exploitation or buying a stolen item. There are effective policies to solve all these. Be confident to visit one to purchase, sell, or get your cash loan.   

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