Becoming a Pawnbroker
To become a pawnbroker, obtain a license from your state or local government. You will need a location in a high-traffic area near public transportation or shopping districts. Stock your shop with merchandise like jewelry, electronics, and musical instruments that can be used as collateral. Learn to appraise personal property by taking classes or reading books, especially regarding jewelry transactions. Get a business license if required where your pawn shop is located.
Pawnbroking Operations
Keep accurate records of loans and inventory so your accounting is balanced and up-to-date. Move stock regularly to maintain cash flow. Pawnbroking loans are usually short-term, like six months, but you can discuss renewing with customers. Provide a handy financial alternative, especially for those with poor credit or in need of fast money.
Business Skills and Risks
Being a good pawnbroker requires an entrepreneurial spirit and business skills like negotiating deals. However, pawnbroking is relatively low-risk lending. If a customer cannot repay their loan, you can sell their collateral.