Pawnbrokers stress that their business is tightly regulated. For example:
They must maintain a current city license.
Customers must be 18 or older to buy, sell or pawn.
To sell or pawn an item, you need to show a state ID, leave a fingerprint and sign a form listing name, address, the item’s serial number and other details. Police collect these forms daily to check against a national database of stolen goods, and the shop must hold the item while this is done. (This is why police urge you to record such information about your valuables.) “We have a very good relationship with the pawnshops,” said Omaha Police Sgt. Tina Jennum.
For guns, you must be older — 19 for long guns, 21 for handguns — and stricter federal laws apply, including background checks. The pawnbroker must have a federal gun dealer’s license. Police scan this data for people, such as convicted felons, who are not allowed to have guns.
State law limits the loan interest a pawnbroker may charge. (In Nebraska, the maximum is 15% a month on amounts under $1,000 and 10% a month for amounts over. In comparison, credit cards average about 12.1% annually, or 0.96% a month.)
For example, I’ve got this ring ...
Let’s say you offer a gold wedding band to the pawnbroker. He weighs it, examines the material, checks the wear, considers the market and says he’ll buy it outright for, say, $85.
Or he offers to loan you $85 for four months at 15% interest per month. He holds the ring as collateral. You can pay off any time during the four months to reclaim your ring. At one month, you’d repay $97.75 (the original $85 plus $12.75 interest). At two months, the total would be $110.50. At the full four months, it would be $136.
You could extend the loan beyond four months, paying $12.75 a month to do so, although soon you’d have paid more than the ring’s worth.
Or you could keep the $85 loaned to you and forfeit the ring. Then the pawnbroker would sell it to someone else.
SOURCES: Omaha Police Department; John Dineen, Sol’s Jewelry and Loan; lowcard.com
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