THE LOAN OR PAWN PROCESS
(WHAT WE LOAN CASH ON)
Put simply – customers pledge property as collateral, and in return, pawnbrokers lend them money with renewable loans. When customers pay back the loan, their merchandise is returned to them. Pawn loans are made on everything from jewelry to electronics. If the customer elects not to redeem their collateral, there is no credit consequence to the borrower, because these are non-recourse loans and the items are sold at a discount to retail consumers.
The average pawn loan is $85
(with the vast majority of loans being in the range of $20-350)
The contract period is 30 days total
(it’s actually a renewable contract, every 30 days, so you will never lose your items)
Total monthly service charges are variable to your needs
(depending on the amount of money and length of your loan)
State laws prescribe what information is required from the consumer to enter into a pawn transaction, and may include; Name, Address, Phone Number, DOB, Gender, Ethnicity, Government-Issued ID, Date/Time of transaction, and a complete description of the collateral (including any available serial numbers or owner-applied markings). In addition, customers have to show their I.D., and sign the pawn ticket.
This information is regularly transmitted to law enforcement, which dramatically decreases the likelihood that a thief would bring stolen merchandise to a pawn store. The national average for stolen items found in pawnshops is less than one half of one percent (Windy City Jewelry & Loans’ figures are lower).
So if 99.5% of stolen property is NOT going through pawnshops, where should you look??? Jewelry Stores (who buy direct from the public), Flea Markets, Gold & Silver Buyers, Repair Centers, Used Sporting Goods stores, 2nd Hand stores, Consignment shops, Collectible stores, and Antique shops do not have to report to the authorities.
Frequently Asked Questions
How does a pawn work?
A pawn is another term for a collateral loan. Pawnbrokers lend money on items of value ranging from gold and diamond jewelry, musical instruments, televisions, electronics, tools, household items, and more. Some pawn shops may specialize in certain items. Loans are based on the value of the collateral. When a customer pays back the loan, their merchandise is returned to them. A customer may also choose to surrender your collateral as payment in full. Pawn shops must offer extensions or renewals.
Why would someone go to a pawnbroker to get a loan?
Pawnbrokers offer the consumer a quick, convenient and confidential way to borrow money. Short-term cash needs can be met with no credit check or legal consequences if the loan is not repaid. Pawnbroking imposes a discipline on the borrower that other lenders do not. Pawn loans do not cause people to overextend credit or go into bankruptcy.
How much should I expect for a loan on my item?
Loan amounts vary according to the value of the item. There is no minimum dollar or maximum dollar amount allowed on a pawn transaction. Your loan amount will be determined according to other factors such as demand, condition and value of the item. Not all pawn stores evaluate the same, so price will vary. Be sure to come to a licensed and bonded store, like Windy City Jewelers & Loan.
How do you determine the value of the item?
Pawn shops base the value of the item on current appraised value, its current condition and the ability to sell the item. Pawnbrokers use research tools that they have at their disposal to determine an item’s value and get you the most money for the item. The appraisal process varies depending on the type of item—for example, jewelry is evaluated differently than a DVD player. All items that pawn shops buy or pawn are tested to ensure that it works properly.
How can I be sure the merchandise I purchase at a pawn store isn't stolen?
Less than half of one percent of all pawned merchandise is identified as stolen goods. That’s because customers must provide positive identification and a complete description of the merchandise. This information is then regularly transmitted to law enforcement, which dramatically decreases the likelihood that a thief would bring stolen merchandise to a pawn store.
Are pawnshops regulated?
Yes, Pawnbrokers are governed by all of the major federal laws that apply to entities designed as financial institutions. The federal laws that regulate the pawn industry are Patriot Act, Truth in Lending Act, Equal Credit Opportunity Act, as well as Data Privacy and Safeguard of consumer information as part of the Federal Trade Commission (FTC) Rules. States have regulated the pawn industry for decades, and most pawnbrokers are licensed and regulated by local authorities as well.
Do pawn customers enjoy the same protections under federal law that customers of other financial institutions enjoy?
No. Pawn transactions are the only type of consumer credit that requires reporting to local law enforcement agencies. This reporting is required daily, and must include extremely sensitive personal information about the consumer (i.e. ethnicity, gender, address). Much of this information qualifies as “non-public personal information” under federal privacy law and is entitled to protection as such. We pride ourselves in securing your information and protect it vigorously.
Do most pawn customers lose their merchandise?
On average, about 85 percent of all pawn loans are repaid. Repeat customers make up a majority of the business, similar to any other lending or retail establishment. Pawnbrokers establish relationships with their customers because they often borrow against the same items repeatedly. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan.
Are pawns rates excessive?
No. To provide their service, all lenders must charge rates commensurate with the size and duration of the loan, collateral, risk and recourse. Pawn transactions are small-dollar, short term loans with no hidden charges.
FILLING THE GAP
The Consumer Federation of America found that more than 50% of Americans are living paycheck-to-paycheck. When it comes to financial alternatives, pawn customers do not have many safe, convenient, regulated choices. Pawnbrokers offer the consumer a quick, convenient and confidential way to borrow money. In short, the pawn loan is often the cheapest, easiest way to fill the gap … when the consumer comes up $50-100 short.
| Short Term Credit Alternatives |
| Type of Credit | Fee |
| $75 pawn loan @ 20% (30 days) | $15 |
| Bank NSF fee | $28 |
| Merchant NSF fee | $28 |
| Credit Card late fee | $29 |
| Credit Card over-the-limit fee | $35 |
| Utility bill late fee | $25 |
| Utility bill reconnect fee | $58 |
| Mortgage Company, average late fee | $53 |
To provide their service, all lenders must charge rates commensurate with the size and duration of the loan, collateral, risk and recourse. Pawnbrokers offer non-recourse loans, looking only to the item being pledged to recover their investment if the borrower chooses not to repay the loan. Pawn transactions are small-dollar, short-term loans with no hidden charges. Short term cash needs can be met with no credit check or legal consequences if the loan is not repaid. Pawn loans do not cause people to overextend their credit or go into bankruptcy.
Secured, short term loans from pawnbrokers are highly regulated, and all the terms of business are clearly stated in a state-regulated contract. In today’s society, many people depend on pawnbrokers to help them meet daily financial needs not offered by other institutions. Pawn customers represent the working families of America who periodically experience an unexpected need for short-term funds. Pawn loans keep the electricity on, the rent paid and cars running with full tanks of gas.
This growing, competitive industry is constantly working to enhance the image of pawnbrokers, while offering needed services to their communities. Today’s pawn stores are attractive, welcoming places to do business. Most of them are family-owned and operated stores that offer superb customer service. Although pawnbrokers are primarily small business owners… they can also be larger, publicly traded companies that help to add to the professional status of the industry.
Working with law enforcement helps ensure the safety of pawn customers and their property. Pawnbrokers comply with all federal, state and local regulations and laws. In most jurisdictions, they provide local law enforcement with data on all transactions on a daily basis.
Put simply—customers pledge property as collateral, and in return, pawnbrokers lend them money. When customers pay back the loan, their merchandise is returned to them. Pawn loans are made on everything from jewelry to electronics. If the customer elects not to redeem his or her collateral, there is no credit consequence to the borrower and the items are sold at a value price to retail consumers.
Who We Serve
Pawn customers are primarily middle class consumers who need short term credit. This is a service that pawnbrokers provide when other financial institutions will not. Pawn customers have regular jobs, from working in hospitals to home construction. They support our country and it’s economy by working in government, teaching our children and caring for the elderly. Just like you, pawn customers have dreams; want better lives for their children and a stronger sense of security. However, they also have pressing bills and unforeseen financial issues.
According to GAO analysis of November 1999 Census SIPP data, as many as 55 million people (28% of US adults) are “unbanked” (this figure is closer to 32% now). While 1/3 of pawn customers borrow only twice per year to help cover unexpected expenses, repeat customers make up a majority of the business (similar to any other lending or retail establishment). Pawnbrokers establish relationships with their customers because they often borrow against the same items repeatedly. Depending on the economy, 70-80% of all pawn loans are repaid and the items reclaimed.