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Everything you need to know about Pawn Shops


Your grandmother’s old silverware or gold watch that’s tucked away in the attic can get you instant cash by taking it to a pawn shop. But, before you walk away with money in your pocket, here are the basic ins and outs of how pawn shops work.

What to Know about the Pawnshop Experience

Customers start by pledging property as collateral, and in return, pawnbrokers lend them money. When customers pay back the loan, their collateral is returned to them. Pawn loans are typically made on gold and diamond jewelry, gold coins, fine watches, and silverware.
 If the customer chooses to not redeem his or her collateral or cannot pay back the loan, there is no credit consequence to the borrower, and the items are sold at a value price to retail consumers. 
At Provident Loan Society, a not-for-profit lending organization,  your items will be appraised onsite and the cash will be given to you immediately. The process takes at most up to 20 minutes, so you’ll be walking away with your money in no time.

What’s The Deal?

Pawn shops offer collateral loans for surprisingly low interest rates. Typically, they specialize in short-term small loans. In New York, traditional pawn shops charge a 48 percent interest rate, but at Provident Loan Society,  the interest rate is only 26 percent. The handling fees are lower as well. Plus, customers are given up to six months to pay the loan off – along with a grace period. This is much lower than the 1-4 month payment period at regular pawn shops.
Provident Loan Society can offer this type of deal because the customer offers personally owned property as collateral, which significantly reduces the risk for the lender. When the customer pays back the loan, the property is returned – simple as that.

Can I really trust a Pawnshop?

Though many people have a negative perception of pawnshops being seedy and shady, pawn shops, in reality, operate under tight federal regulation and operating standards.
Pawnbrokers are governed by all of the major federal laws that apply to entities designed as financial institutions.
The federal laws that regulate the pawnshop industry are Truth in Lending Act, Patriot Act, Equal Credit Opportunity Act, and Data Privacy and Safeguard of consumer information as part of the Federal Trade Commission Rules. States have regulated the pawn industry for decades, and for over 100 years, New Yorkers have come to Provident Loan Society as a welcome alternative to the high-interest rates and fees of traditional banking institutions and pawn shops.