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Thursday, February 12, 2009

How Do Pawn Shops Work?

“Can you tell me how pawn shops work?” Recently, several people asked this question of the Newton Falls Public Library staff. Not finding any books on the library shelves dealing with pawn shops, we went searching online.

Ohio Revised Code (ORC) 4727 [http://codes.ohio.gov/orc/4727] deals with pawnbrokers. ORC 4727.01 states that “Pawnbroker means a person engaged in the business of lending money on deposit . . . of personal property . . . at a total charge, rate of interest . . .”

Before doing business with a pawn shop it is important to verify that they are licensed. The Ohio Department of Commerce Division of Financial Institutions [www.com.state.oh.us/dfi/PawnbrokersPreciousMetals.aspx] has a great deal of information about the licensing and record keeping required of pawnbrokers. There is also important information for consumers to know if they are considering doing business with a pawn shop. All pawnbroker offices must be licensed and conspicuously display the license. Asking others who have dealt with the business, checking with the Better Business Bureau [www.bbb.org] and reviewing the requirements of ORC 4727 is always wise.

Understand what you are agreeing to when you leave your item. You can sell it to the broker or you can leave it as a deposit on a loan. If you leave an item, make sure you know exactly what the interest rates and charges are. There are additional charges that can be placed by the broker pursuant to the law. If the loan amount, interest, and charges are not paid by the agreed time, the item will become the property of the broker.

Do not leave without checking all your paperwork. The pawnbroker must give a statement in ink with the name and address of the person making the loan or purchase, the amount, the rate of interest, the time and date, and the date when payable. A receipt is required for each transaction and must also contain a full and accurate description of the articles pledged or sold.

Each day pawnbrokers are required to give local law enforcement a description of all items pledged or purchased by them. Items pledged must be kept for at least seventy-two hours, and those purchased kept at least fifteen days, unless given written permission to dispose of sooner by the local police chief or county sheriff.

When selling, be aware that you will not be getting top dollar; the pawn shop owner is in business and is seeking to make a profit. If you are looking to make a purchase, as with any other store, it is good to have knowledge of the value of the item you are considering in order to know if the broker’s price is a fair one. He will be looking to make at least a small profit on his original investment.

1 comment:

jordanjohnsonlj said...

I honestly didn't understand how pawn shops work until now. Even watching TV shows like Pawn Stars didn't help me to understand the process. I can think of a few family trinkets that I should probably take down to my local pawn shop. http://www.wilmingtonjewelryandloan.com