Pawnbrokers and the 2nd hand goods industry has received a bad rap in the past, conjuring up images of seedy dank stores full of stolen goods, hidden rooms with ‘illegal’ products and junkies dealing second hand goods to secure their next fix.
Not ideal for an industry that is tightly regulated in Australia through consumer protection laws, with clearly defined rules and regulations regarding identification, record keeping and reporting.
In reality a large number of the Pawnbrokers stores are well lit, well run small businesses providing a valuable service to buyers and sellers alike. Unfortunately when times turn bad people turn to pawn shops to raise some extra cash so the vibe toward pawnbrokers is one associated with hard times.
The reason for the pawnbroking laws is to make it difficult for thieves to transform the stolen property easily into cash, such as power tools, effectively increasing the difficulty level for the thieves to receive the monetary benefit they desire for the goods they have stolen. These laws regulating pawnbrokers differ from state to state but generally the pawnbroker will need the following from a person wishing to pawn an item:
• Photo, government issued proof of the pawner’s identification (the more you can bring the better)
• Be sure the goods for pawn belong to the seller – If you have the original receipt, bring that as you may be able to get more for your pawn
• Be sure the goods for pawn are free of debt or encumbrance ( rent to buy, mobile phone contracts etc. ) Legally these goods are not owned by you until the debt is paid
• To hold the goods for a set period of time before doing anything with them – This allows stolen goods database checks to be undertaken
Pawnbrokers can also use online serial number search facilities to verify that the person pawning the item is the genuine owner and that the items have not be logged as stolen on these websites. This provides them instant feedback and an additional layer of protection against fraudulent transactions.
How Does a Pawnbrokers Work?
Pawnbrokers essentially provide a service to people who need money by loaning money against collateral (goods) – a collateral loan. To be able to pawn your goods the pawnbroker has to deem them suitable and valuable and then will value the goods for the loan amount based on the second hand value of the goods.
After you take out your loan, if you don’t return within the period of that loan agreement the Pawnbroker can sell your item. For example you may pawn a Dewalt Power drill for $250.00 for 1 month.
You give the Pawnbroker your property and he gives you $250. At the end of the month you can return and pick up your goods by paying the monies you borrowed back PLUS the borrowing charges (interest) which varies from store to store state to state – but can be 20% or more.
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