Many states require pawnbrokers to report all items pawned to the local police daily so they can check it against reports of burglaries and robberies. State law may also require that the broker enforce a holding period on items purchased to allow time for local law enforcement authorities to track and identify items that may have been stolen.

State law may require that the pawnbroker establish positive identification of the seller of property through photo identification, such as a driver’s license. However, in many states, the law protects both the public and the broker from unknowingly dealing with stolen goods. Generally, the pawnbroker assumes this risk when they take possession of the property. One issue that plagues pawnbrokers is the risk that the property pawned in their shops is stolen. Rather, the pawnbroker has made a quick evaluation of the property and if the borrower never returns, the pawnbroker believes they will get their money back from the sale of the item. This means that the transaction does not affect their credit rating. However, if an owner of pawned property returns within the proper period of time and is ready to repay the loan plus the specified interest, the owner should get their property back from the pawnbroker.Ī pawn broker usually does not perform credit checks on the borrower and there are no consequences to the borrower if they never return to pay back the loan and redeem their property. In this case also, the pawnbroker becomes the owner outright of the property and can sell it. Or, sometimes, the property owner will choose not to redeem their property by paying off the loan plus interest within the time specified by their contract with the pawnbroker. On occasion, a customer simply sells their item of personal property outright to the pawnbroker for a one-time cash payment. In this case the pawnshop becomes the owner and offers the property for sale to the public.

In reality, some borrowers never return to repay the loan and reclaim their property.

The item of property is technically a kind of security for the loan. A pawnshop is a business in which a person can get a loan of cash in exchange for handing over personal property of value, such as jewelry, to the pawn shop owner.

What does it mean to pawn something