US pawn shops are retail outlets selling a variety of used merchandise, but they also act as lenders for short-term loans secured by personal property. In a pawn transaction, customers borrow against personal assets – usually jewelry or electronics but sometimes tools or musical instruments – in the same way that other consumers might borrow against real estate, stocks or insurance policies. The total value of merchandise sold in a pawn shop and the amount of money it lends varies considerably by store and region.

In addition to buying and selling goods, pawnshops often provide financial services including fee-based check cashing and payday or tax refund anticipation loans. Some also offer rent-to-own programs and currency exchange services. Most pawnshops sell only gold and other precious metals, but some buy electronic devices, collectibles, tools, musical instruments, firearms and other merchandise. Some pawnshops also operate online and mobile apps that allow customers to sell items on the go.

US Pawn Shop: What to Look for in a Trusted Shop

The most common function of a pawn shop is to loan money to consumers at high interest rates. When a customer brings an item into a pawn shop and agrees to a purchase price, the pawnbroker keeps the merchandise until the consumer pays back the loan plus any applicable fees and taxes. The pawnshop then returns the item. Poor consumers, people with no credit cards and people who don’t have bank accounts often rely on pawnshops for quick access to cash. The pawnshop industry’s performance depends on the health of the overall economy and the number of consumers who fall below the poverty line, as this group represents the primary source of demand for merchandise sales and pawn loans.