Pawn shops offer a way to get fast cash by leveraging valuable items as collateral for loans at high interest rates. But how exactly do they operate, and what’s the best way to deal with them? This article breaks down the basics of how pawnshops work and offers advice on how to maximize value for your items.

Pawnshops typically offer short-term cash loans, with a payment period set on a monthly basis. If an individual fails to repay their loan (plus interest) within the given month, they will forfeit the property they brought in for pawning. However, it’s possible to extend the repayment deadline by paying a fee and accruing additional interest charges.

Everything You Should Know About Pawn Shops

Most pawnshops earn the majority of their revenue from reselling merchandise that isn’t reclaimed, and the rest comes from selling a customer’s collateral. In addition, many pawnshops report merchandise purchases to local law enforcement on a daily basis. This can be especially problematic for those who sell firearms or other expensive assets through a pawn shop.

While it’s important to understand the role pawnshops play in our communities, it is also vital to recognize that there are other options for getting out of debt. Money Fit offers tools and services that help individuals achieve financial stability, without staking their personal belongings on a risky temporary fix. To learn more, speak with a Money Fit advisor today.