Questions about the pawnshop / pawnbroker
Pawn shops and pawnbrokers will give you a loan for a pawned item. A pawned item can be any movable item of value that is in your possession. In this section, we explain how pawn shops and pawnbrokers work, what the pawnbroking process looks like and which valuables you can turn into cash with a pawnbroker. We also explain exactly what a pawn ticket is and what happens if you are unable to redeem your pawned item from the pawnbroker in time. Here you can find out about the legal provisions on pawnbroking and read up on payout values.
What is a pawnshop?
You can exchange a valuable item or object for money at a pawnshop. You give the pawnshop the object or item of value that belongs to you as a pledge for the money you receive in return for your item of value. This loan or pawn credit, as it is called in this particular case, is based on the value of your pawned item.
A special feature of this loan is that you do not have to incur any debt for this particular loan. This is because you are providing a pledge, i.e. a valuable item from your property, for your loan. This is another reason why the pawnbroker does not have to check your creditworthiness or income situation, nor does he want to see a credit report. You also do not have to state what you want to use the loan for and why you have a financial bottleneck.
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A pawn loan always runs for a relatively short period of time, which is set out in your pawn loan agreement. It also stipulates that the pawnbroker has the right to auction off your pledged item after a waiting period if you do not redeem the pledge.
How does a pawnshop work?
A pawnshop gives you a loan and takes a valuable item from you as collateral. The pawnshop finances itself through the fees and interest it charges for granting the pawn loan. If a customer cannot redeem their pledge within the agreed time, the pawnbroker may auction the pledge after one month as a waiting period.
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As you offer a pawned item to the pawnbroker, the pawnbroker gives you a loan based on the value of the item. This is done without a Schufa check or credit check. Only the value of your pawned item is important, as it determines the loan amount that the pawnbroker will grant you.
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How does it work in a pawn shop?
If you want to turn a valuable item into money in a pawn shop, the pawnbroker will first value the item and give you an amount for it. If you agree to the amount, also known as the pawn loan amount, the pawnbroker will draw up a contract with you.
The contract specifies which valuable item you are handing over to the pawnbroker, the value of the item and how much cash you will receive in return. It also stipulates the date by which you must redeem the item of value, i.e. pay back the money and fees. This term is set by law and is at least 3 months. There is also a waiting period of one month. After this period, the pledge, i.e. the item of value, must be redeemed. If this does not happen, the pawnbroker can offer the pledged item for sale at an auction.
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If you have concluded a contract for a pawn loan, you will receive a pawn ticket for your property, on which the terms of the contract are printed, a signature of the pawnbroker and the number under which your pawn was delivered to the pawnshop. This ensures that the correct pledged item is assigned to your pawn ticket.
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What can you borrow from a pawnshop?
Valuables such as jewelry, watches, precious metals and gemstones are most frequently pawned. The value of these items is quite stable, so they are more suitable as pawned items than, for example, electrical appliances such as televisions and computers. The drop in price here is immense. However, cell phones and bicycles are also suitable as pawns.
Car pawnshops such as Pfando, which specialize in cars as pawns, are a special form of pawnshop. Almost any vehicle with a road registration can be used as a pawn here. One advantage of Pfando is the fast cash payout:
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How long do things stay in the pawn shop?
The law stipulates that a pawn loan must have a term of at least three months. However, you can also agree a longer term with the pawnbroker. Three months is merely the shortest period for which the pawn loan must exist. If you want to extend the pawn loan again, you can do so for a further three months. The longest period for which you can lend against a valuable item is therefore a maximum of six months. However, three months is the standard loan period.
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Do you conclude a contract at the pawn shop?
Yes, at the pawnshop you conclude a contract about which valuable item you pledge and for how much for a certain period of time. This contract is known as a pawn loan agreement.
The contract stipulates:
- Description of the object of value
- Value of the item at the time of the contract
- Amount paid out
- Duration of the loan
- Interest rate per month
- Deposit fees per month
- Length of the waiting period if you do not redeem your deposit
- Conditions of the auction
As the pawnbroker has the right to auction off your pawned item if you do not redeem it within the agreed time, this is also regulated in your contract with the pawnbroker.
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Can you take a car to a pawn shop?
In principle, you can pledge any movable item of value at a pawnshop and receive cash in return. However, not every pawn shop accepts cars as pawned items. Pawnshops such as Pfando specialize in car pawns.
For you as a customer of a specialized car pawnshop, this also means that there are experienced appraisers who are particularly well versed in estimating the value of a car. Because if you have a financial bottleneck, the amount of your pawn loan depends on the value of the pawned item.
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What happens if I cannot redeem my deposit within the deadline?
If you cannot raise the money for your pledge, the monthly fees and interest within the agreed period, you can extend the pledge agreement. If you are unable to pay the fees, interest and the amount of the pledge at the end of this period, the pawnbroker may sell the pledge. The pawnbroker may offer pledged items that have not been redeemed in an auction after a waiting period.
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What can you hand in at a pawn shop?
Classic pawnbrokers accept all movable items that represent a certain value. These include jewelry and watches, precious metals such as gold and silver and precious stones. But you can also borrow expensive bicycles, bags or leather jackets and furs from a pawnbroker. Some pawnshops also accept cars, motorcycles, vintage cars and motorhomes.
If you are planning to pawn your car, you should first ask whether the pawnbroker you have chosen also accepts cars as collateral. Specialized car pawnbrokers, such as Pfando, on the other hand, have the necessary experts and experience to give you a good valuation of your vehicle.
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How much do you get in a pawn shop?
Since a pawn shop lends out many different valuables, this question cannot be answered with a clear monetary amount. The amount of the pawn loan also depends on the value of the item.
In principle, however, the pawnbroker will estimate the value of the pawned item and pay you 25 to 50 percent of the estimated value. Due to the fairly wide range, it is advisable to obtain a quote from several pawnbrokers. This will give you a good overview of how much the pawn loan could be for your property.
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Can I borrow money from a pawnbroker?
Unlike a bank, you cannot borrow money from a pawnshop. But you can bring a valuable item to the pawnshop and get money in return for your pawn. In practical terms, this is like a loan and is known as a pawn credit.
The biggest difference between the two ways is that you would incur debt at a bank, whereas at a pawn shop you exchange a pawned item for money in return for a fee and interest. The pawn is the security for the pawnbroker, i.e. the equivalent value for the sum of money he pays you. You could therefore say that you get a kind of loan for your pawned item at the pawnbroker's without your entry being checked by Schufa.
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