What is a Pawnbroker?

There are many people who have heard of pawn shops and pawnbrokers, but have never needed to do business with one. Unfortunately, there are times of financial need when people find themselves in a situation where they must contact a pawnbroker. Before doing so, it is important to understand what exactly they are and what they do.

A pawnbroker is an individual who makes secured loans at a high interest rate. The loans are secured by personal items of value, such as a ring.

In order to become a pawnbroker, a person must first know the laws that govern pawnbrokers and pawn shops in his or her state. Generally a pawnbroker will need to obtain a pawn brokers license, a business license if he is opening a pawn shop of his own, and he must undergo a criminal background check.

It is the pawnbrokers job to assess the value of the collateral and to receive repayment. If the repayment terms are not met and the customer defaults, the pawnbroker may sell the collateral to the public. If the payment terms are fulfilled the pawnbroker will return the item to its owner.