Pawn shops need insurance to cover potential losses such as property damage, legal fees, inventory losses, and damage to contents. The insurance rates depend on factors like revenue, claims history, and location, and they range from $400 to $700 per year.
Pawned items are not insured and are collected as collateral for loans. The pawn shop has the right to sell these items if the loans are not repaid.
Legal Requirements
Police mandates that pawn shops report the serial numbers of newly acquired items, helping to track stolen goods. However, most pawned items are not stolen.
The Business of Pawn Shops
Pawn shops provide quick cash loans to people who offer items as collateral. If the borrower does not repay the loan, the pawn shop sells the collateral. Additionally, pawn shops buy items that people wish to trade in.
To pawn something means leaving property with the pawn shop as collateral for a loan. The shop has the authority to sell the item if the borrower defaults. Pawn shops operate under specific laws regarding reporting and business operations.