What is a Pawn Shop?

What is a Pawn Shop

The origin of a pawn shop can be traced back to 3,000 years when the practice of acquiring credit was common among the peasants. Pawnbroking is one of the oldest professions of the world. Individuals from all walks of life have utilised the services provided by pawnshops throughout the history. While the business model of a pawn shop was once misunderstood, it flourished today as a significant alternative to any other traditional ways of borrowing cash.

In fact, pawnbrokers have a long and highly esteemed history of helping people as well as businesses in financially distressing condition.

How does a pawn shop work?

For many years, people across the world have confronted one problem in common from time to time, and that is, the need for quick cash. A pawn shop is a convenient and absolutely, a legitimate place to secure credit loan right away keeping anything of value as collateral. Unlike banks or other traditional lending institutions, a pawnbroker provides a pawn loan without carrying out any credit check.

A pawnbroker determines the amount of cash loan that he/she is willing to offer, based on the current market value and other relevant factors of the asset kept as collateral. If you accept to go ahead with the agreement, the pawnbroker will provide you with a credit agreement and keep your asset safely in secured vaults until you retrieve your item paying off the original loan amount and the due interest.

A Brief History of Pawn Shops

As per the Chinese records, the practice of pawnbroking can be traced back to the beginning of the Western Han Dynasty in 206 BC. While pawnbrokers were significantly more generous in comparison to the modern Western pawn shops, borrowers were able to take up to three years to repay their loans at the fairest interest rates.

The process of pawnbroking started to bloom during the Middle Ages. Pawnbroking was introduced in England by The Norman Conquest, while the Lombardy region of Northern Italy became identified as the seedbed of pawnbroking. A pawn shop is often referred to as ‘Lombard’ in Europe and ‘Lombard Banking’ was a universal term for pawnbroking.

With the condition of lending money at the modest rates of interest, the Catholic Church approved many old pawn shops to work for helping the poor. In the late 19th century and early 20th century, the number of pawnbrokers increased as much as public buildings in Britain, lending money on virtually anything from bed linen, cutlery to the best wardrobes.

It was not that long ago when pawnbrokers were negatively portrayed in the press. The image of pawnbrokers has dramatically changed, especially over the past twenty years or so and today, many people depend on a high street pawnbroker to help them meet their short-term financial needs.

The Process of Pawnbroking Today

When you walk into a pawn shop to take out a cash loan against a luxury asset, the pawnbroker will assess your item explicitly to determine an accurate value based on its overall condition and the current market price. Your pawnbroker will provide you with a credit loan for a specific term without checking your credit history. While there is no minimum period for a pawn loan, the maximum tenure is generally six to seven months.

You can reclaim your asset by paying off the full loan amount along with the interest that was agreed upon by the end of your loan term. Although any trustworthy pawnbroker in London or any other big city usually offer 14-days cooling off time to draw out an agreement, the asset kept as pawn will become the pawnbroker’s property if you do not wish to retrieve within the time mentioned above.

For those who are unable to redeem their item, a pawnbroker may help to get a new contract, extending the loan term. You will only have to pay back the interest you owe.

Although the rules and regulations governing the pawnbrokers may vary from place to place, all pawnbrokers are today heavily supervised and required to get a license for trading from the Financial Conduct Authority.

If you are looking to raise instant cash and own something valuable, begin your search online and choose a reliable pawnbroker in London or anywhere in the UK to secure a pawn loan without any hassle.

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