The Difference Between Pawning and Selling

A person does not have to own a business to know about selling things. You have probably sold many things in your lifetime. As a consumer, you see how grocery stores and other places of business sell their products and services.

Pawning is similar to selling; however, there is a catch to it. No matter where you live, there is probably a pawn shop or two close by. You may never have visited a pawn shop or truly understand what they do. Here are the main differences in selling and pawning items:


There are no strings attached to selling (except if you consider warranties). Let us assume that you have a booth at your local flea market. When customers pay your asking price for items, then ownership rights revert to them immediately. The items are theirs to do with as they please.

You probably are not selling things that you want to keep. What if you sold something accidentally? You would have to pay the price that the customer asks—which may be more than your original price. So it is easy to see that selling is usually a permanent transaction.


Pawning can be thought of as a loan on collateral. The item you are putting up for the money in called a pawn. Most things of value can be pawned, such as jewelry, electronics, and power tools. Many pawn shops also accept collectibles, antiques, and even cars.

Instead of actually selling your item to the pawnbroker, you are borrowing money against it. Do not get your hopes up to high when you get a pawn loan. The most you will get on a pawn is usually 10% of its value. You may have paid $500 dollars for your diamond ring; however, you are probably going to get a $50 loan at a pawn shop for it.

Your pawn loan will last between 60 to 90 days. During that time, the pawn shop will hold your item until you repay the loan, plus interest and a storage fee. If you choose, you can extend the loan for another time period by simply paying the interest and storage fees. When you pay the loan in full, the pawnbroker will return your item.

Should you not pay on your loan and the time limit is passed, you forfeit your pawn. The pawnbroker is now the legal owner of your item. The store may sell it at any price they want. You can buy your item back; however, it will be at a much higher price than your loan.

Popularity of Pawn Shops

Pawn dealers have existed since ancient times. Up until recently, pawn shops were the most popular way for poorer people to get needed cash. Paperwork is minimal and you do not have to show proof of income or have good credit. Pawn loans are simple.

Today, credit cards and other lines of credit have made it easier for people to get emergency loans. Many people also go to businesses that offer cash advances, or payday loans. Still, there are those who would rather bring things in to “hock” at the pawn shop. If you consider the value of your item, it may be more beneficial if you sell the item for your price.


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