Pawn Shops Go Upscale: Is This a Good Way to Score Extra Cash?


pawn shopFlorida-based dentist Dr. Michael Hammond intended to finance his dental practice using a small business loan from a traditional bank. Given his strong credit and business plan, he assumed he’d have no issues.

But the bank wouldn’t grant the loan he expected, so Dr. Hammond moved on to plan B: selling family jewelry to an online pawn shop for $40,000.

Though the words “pawn shop” tend to evoke thoughts of “Cash 4 Gold,” online pawn shops have taken the strongest part of the business model (fast cash in exchange for your stuff), and revamped it for a higher-end customer. With banks getting loan-shy post-recession, these virtual shops offered consumers another source of funding—which they could procure from their jewelry box or favorite curio drawer.

And many took advantage: According to research out of Vanderbilt University, about 8 million households in the United States have used pawn shops. That rate has risen steadily by about 3-4% per year, before ballooning to a 20% increase starting in 2007, when the recession began.

Could some of these newly revamped sites be a viable way to make extra cash—or are they too good to be true? Read on to find out whether pawning your stuff could be a good choice for you.

How It Works

Pawning, at its core, is a way to borrow money from somewhere other than a bank.  When you need a little extra money but don’t want to outright sell a valuable possession, you “trade” it for a short-term loan from a pawn shop. Once you and the shop agree to a value for your item and loan term, funds can be wired to your bank account in as little as 24 hours. Assuming you honor the terms of your loan and make monthly payments, you’ll get your item back.

One of the major appeals of securing a loan through a pawn shop is that it has no impact on your credit. In order to borrow money from a bank, the bank will check your credit, and if you’re delinquent with payments, it will have a negative impact. If you default on a pawn loan, the shop simply keeps your item.

RELATED: 10 Top Credit Mistakes to Avoid

Unlike traditional pawn shops, which tend to buy anything from stereos to vacuum cleaners and have an average pawn transaction value of $150, online pawn shops deal exclusively in higher-end goods like jewelry, collectibles, designer handbags and expensive electronics. Unlike “Cash 4 Gold” style outfits, online shops aren’t interested in broken gold chains or a late-model television.

Potential sellers send a digital image and description of the item they’re interested in selling or pawning to the site and receive an expert appraisal in a day or less, along with corresponding loan terms like interest rates, fees and loan duration.

Once an agreement is reached, customers ship the items for free—and receive cash in as little as 24 hours. Though the leading industry sites like iPawn, UltraPawn, Pawngo and borro vary in exactly which items they’ll accept, all fully insure items for the duration of the loan term.

Dr. Hammond says that the overall loan terms and experience iPawn offered were more competitive than what he found at several banks. “I found low interest rates, a better payment schedule and real customer service that doesn’t treat me like an account number,” he recalls.

  • Erka

    sometimes,,pawnshop save our lives,,,we could got fresh money fast with less paperwork like bank
    for example you need fast money for important thing like pay hospital, and of course waiting the bank apply our loan is frustating with that papper work,

  • Erka

    Pawnshop save my lives when i must my credit card bill and i have no money,,,i just go to pawnshop to pawn my valuable goods for fresh money

  • Stephen

    I found another one and it looks like their interest rates are much better due to Texas lending regulations.

  • John Decker

    This is an interesting article. I always love going to pawn shops because you never know what you can find and they have great stuff. Shops like gainesville pawn shop have a great selection and reasonable prices. Pawn shops are also great because you can sell objects you thought had no value.

  • DonBattis

    How can borrowing at 6% PER MONTH to pay off a credit card at 16%APR be a smart move?
    You might want to check your math.

    Don Battis, CEO

  • BestCollateral


    I’d only like to add that, for buyers pawn shops have some great items at an affordable prices and for the sellers the offer can lure them to pawn an item instead of selling it!

  • Sue

    Nice article Stephanie, however was around before ipawn, ultrapawn or borro… curious why you didn’t include them in your article. I’ve been using them since Dec 2012. Not to mention their rates are so much lower… I guess most people just don’t know about them. Its hard to beat a 12% APR. Maybe thats why they aren’t advertising as much as the others, they aren’t ripping people off :) my two cents.

  • Roger Davis

    Quick simple tips to help people score extra cash.

  • Mia Hart

    I know that when I was in college the pawn shop was a life saver. I was really struggling for money and was able to pawn some things.

    Mia |

  • bills8091

    I know my friend likes to use pawn shops. He always has money to make his payments though. I like to shop at them.
    Bill |

  • Rosie Sharpe

    I had never thought of a pawn shop like a bank before. Realizing that, I think pawning something is a great way to earn a little extra money. I also like that you pointed out that it doesn’t affect someone’s credit, which is a huge bonus. Thanks!

    Rosie |

  • Andre Franklin

    My friends and I use to go to pawn shops every couple of weeks to see what they had to sell. We have found a few amazing deals there. I haven’t ever tried to get a loan from one before, though.
    Andre Franklin |

  • Kirstin Guerra

    I have only been to one pawn shop in my life, and that was a couple days ago and I found some really cool things there that I want. I mean they give you a good bargain, but is it really legal or is it working? I want to find out more about pawn shops.

  • Yonker lee

    Great explanation indeed!Pawn shops have made a long way to gain customer attention for their flexible schemes.But the thing is you should opt for the right one for the best offers.

  • Marc Goldberg

    I found another one and the interest rates are insanely low at 1.99%. Could be just a promotion or these guys are doing it to take market share.

  • Peter

    Pawnshops can come really handy in a lot of situations. In case you ever need a loan urgently, you can get it securely without having to do much paperwork from any pawnbroker. Although, you should be wise in choosing one of the pawn brokers who has a good reputation among the people of your locality.

  • Fish Brothers Limited

    I found another one pawn shops in UK and it looks like their interest rates are much better due to Texas lending regulations.

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