Can You Trust a Local Pawn Shop?

Thinking about pawning
Thinking about pawning

Most local pawn shops get a bad reputation for good reason. They deal with a lot of customers who are in distress and need money quickly. Pawn shops don’t require you to prove ownership of an item or where you got it, which means they may end up purchasing stolen goods.

There’s also the fact that some pawn shops don’t accept returns on the things they sell. However, they’re an invaluable resource if you’re hoping to make some quick money or buy something for a fraction of its retail price.

With all that said, can you trust a pawn shop near you, and is pawning safe?

Can You Trust a Pawn Shop?

A pawn shop is a business that offers a number of different services such as personal loans and reselling retail items. You have the option to sell an item for a flat sum or pawn that item.

It’s important to know how a pawn shop should function before you trust them with your business.

Selling an item to a pawn shop is simple. You and the pawnbroker come to an agreement on the value of the item and how much you will get paid. They pay you in cash, and the transaction is thus complete.

If you wish to buy the item back, you will then have to pay the new price. Expect to pay much more than the amount it sold for.

You also have the option to pawn an item. When you pawn something, you’re taking out a loan with that item as collateral. The pawnbroker gives you cash for the item and holds onto it until you pay back the loan plus interest.

Failure to repay your loan means the pawnbroker keeps your item. It’s best to only pawn items if you need quick cash but have a paycheck coming around the corner. You should avoid pawning out any family heirlooms or items of importance, as failure to repay your loan means forfeiting them.

Pawn Shop Myths

There are a lot of myths about pawn shops that need to be addressed.

First of all, a lot of people think that pawn shops are unregulated and operate however they want. In reality, they are heavily regulated and must have a license in their state.

There’s the belief that pawn shops work with criminals who buy and sell stolen goods. However, that could mean getting into trouble with the local authorities and risking the entire business. Instead, anyone selling to a pawn shop must provide their personal details and a valid photo ID.

People also assume that pawn shops only sell poor-quality items. If you’ve ever watched the History channel, you would know that a lot of valuable electronics, artifacts, and jewelry makes their way into a pawn shop. While not everything is going to be a rare find, they definitely don’t just buy whatever junk you have to sell.

Are Pawn Shops Trustworthy?

Every pawn shop has to follow its state and local laws. The pawnbroker must also own a license to run a pawn shop. However, every pawn shop is different, and you want to find a legitimate operation before you trust them with your belongings.

One of the best tips to identify a legit pawn shop is by checking customer reviews. People love to complain online about their bad experiences as well as share good ones.

Check a pawn shop’s licensing to make sure they’re a legitimate operation. If you’re going to pawn an item, see if they have some insurance coverage to protect your item if it gets damaged or stolen.

Lastly, look for information on an item’s value before you sell or pawn it. Knowing its value will help you determine if a pawnbroker is trying to rip you off or not.

Is Pawning Safe?

While selling means permanently handing over your items in exchange for money, pawning is a temporary measure. If you need money fast, you can pawn something for a loan. Deciding between pawning or selling depends on how attached you are to an item and whether or not you’re willing to pay back a loan.

But is pawning an item safe? How does a pawn shop assure you that your items won’t suddenly go missing or get sold?

Is Pawning Jewelry Safe?

Jewelry is probably one of the most valuable items you have in terms of its value to weight ratio. It may also hold personal value to you if it was previously owned by a family member or gifted to you by a loved one.

As such, the last thing you want to do is pawn some of that jewelry. However, life comes at you fast, and it’s one of the easiest things to exchange for money.

Whether or not it’s safe to pawn jewelry depends on the individual pawn broker and the shop. Always make inquiries about how they store your jewelry. If they’re trustworthy, they should at least be able to give you an idea to assuage your fears.

What kind of storage shelves do they use? How do they separate and distinguish one person’s jewelry from their other stock? And do they have a 24-hour surveillance camera watching over it?

The United States has strict rules when it comes to operating a pawn business, so you shouldn’t have to worry too much about things going missing.

Are Pawn Shops Insured and Are My Items Protected?

Pawn shops must legally get insurance like any other business if they want to protect themselves. One of the types of insurance they can purchase is protection for items that have been pawned.

As with any type of collateral, a pawn broker must protect whatever item or items are used if they want to get their money back. Failure to do so can forfeit the loan and open themselves up for a lawsuit.

Most pawn shops use a combination of security systems and cameras to keep watch over their items. Always take a look around before you do business with them. If you don’t see any kind of visible security systems, you may want to take your business elsewhere.

Are Pawn Shops Regulated?

Luckily for people who frequent pawn shops, the owners must adhere to the local and state laws in order to operate their business. Anyone who works as a collateral loan broker must have a license. There is no such thing as a legitimate pawn shop that does not follow the law.

One of the easiest ways to know if a pawn shop is legitimate is if it has a real business location. These locations go through mandatory audits that help to keep them in line. Gun sales in particular are always tracked by local law enforcement and the ATF.


All New York City businesses must comply with the federal, state, and City laws associated with them. When it comes to pawn shops, there are pages of laws specifically detailing what they can and can’t do.

For example, a pawn broker license is required to run a pawn shop. In addition to that, the individual must seek continuing education every two years to stay on top of changing regulations.

Every collateral loan broker needs to keep a book with certain information about a transaction. That includes details about the goods pawned, the amount of money loaned, and the name and residence of the person pledging the goods.

The book they keep must always remain open to inspection by the attorney general, the mayor, or some other authoritative body.

If you ever notice a pawn broker doing some kind of shady business, you can always call the local authorities or through NYC 311.


Opening a pawn shop isn’t as simple as renting a building and starting your business. You have to file your business name certificate with the county clerk, apply for a certificate of authority, and get your fingerprints taken at the nearest Department of Consumer Affairs Licensing Center.

After all of that, an individual can file for a license at the DCA Licensing Center. There, they can get a pawnbroker license and a secondhand dealer general license.

Because a pawn broker has to go through all of these hoops in order to start their business, you know that they’re in multiple systems. You’re never dealing with someone who works outside the law or can’t be held responsible.

How can you trust a pawn shop in your area? Contrary to popular belief, pawn brokers don’t operate their business any differently than any other small shops.

First, look up some information online about the shop to ensure it’s a legitimate business with good reviews. After that, play it safe when it comes to pawning items and try to hold onto your most valuable belongings.

If you need to sell your luxury goods or get quick cash, come check out Pawn Shop and Pawn Loan by Big Apple General Buyers. There’s no credit check required or income verification. Feel free to use our collateral loan calculator online or call us if you have any questions.


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Pawn Loans – Collateral Loans

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