How To Open A Pawn Shop Legally

By Author: FishPawnBroker
Total Articles: 29

A pawn shop is a poor man’s options to get quick loan and cash, against some valuable or even a temporary loan. The pawning industry was never hit by the recession because they are easier alternatives, compared to banks and other financial institutions. Moreover, when the banks are reeling from the recession themselves, they are in no position to offer new loans to people. Thus, opening a pawn shop might be an idea worthy of considering. However, the owner of a pawn shop should have different skill sets and should have the experience of running a traditional retail shop.

Pawn brokers either purchases the items from the sellers or those can be pawned to the pawnbroker. Let's assume that an item has been pawned for a loan. The customer and the pawnbroker needs to agree on the loan amount, interest charges and a time-frame for repayment of the loan. But what if the customer does not or fails to repay the loan within the stipulated time period? In this situation, the pawnbroker has the right to sell or auction the product which has been pawned to him.

One of the basic and most important skill for a pawnbroker is to establish the price for an item so he can either guess the ideal purchase price, if the item is on sale, or the pawn amount to be offered against it, if the customer wishes to pawn the item and not sell it. Therefore, either the pawnbroker should be an expert in this area or should have professional collaboration with experts of this field. Overvaluing or undervaluing any item can be equally harmful for the business.

As the pawnbroker handles financial transactions and offers loans to the customer, the store owner must apply for and obtain a pawn shop licence, from the prevailing authority or authorities. There is, obviously, a charge for issuing the application and this licence must be obtained before opening the pawn shop. It is highly likely that you might need to submit other reports, records or needed paperworks to get the licence, including your criminal record and credit record.

Once you are done with these steps, you can open a pawn shop legally. You can also try the online market as lots of customers are searching for pawn shop online in UK. There are obvious advantages of opening an online model as you can serve remote customers as well.