| By :
Nick Messe
The pawning or pledging of collateral in exchange for a loan has existed for at least three millennia in China and dates to ancient Rome and Greece in the western world. The basic concept is that an individual brings in an item against which he would like to borrow money. The pawn broker establishes a value for the item based on what he could receive for it if he must sell it. If the amount is agreeable to the customer, he receives his loan and leaves the item with the pawn broker as a guarantee that he will repay the loan with interest. Should the customer not return for his item, it becomes the property of the pawn broker, who can then sell it and keep all of the proceeds. Alternatively, the customer may prefer to sell the item outright. In that instance, the title for the property transfers instantly to the pawn broker. Like a loan, the broker must determine a price for the item that will allow him to make a profit from its sale. In the days before credit cards, automated teller machines, and consumer loans, pawn shops provided a valuable service for those in need of some quick cash. In some areas, they were the only "bank" available to many residents. This service is still available from modern pawn shops, but they have expanded their menu to provide many other benefits. Some pawn shops began offering to cash payroll checks during the twentieth century. For a small fee, those without bank accounts or who could not make it to the bank during its hours of operation could exchange their paychecks for cash. There are still many shops who offer this convenience for their customers. As payday loans began to grow in popularity, many pawn brokers added the service as a side line. These loans generally do not require a credit check. Instead, the borrower provides proof of employment to secure a loan until his next payday. In some instances, the loans are secured by a post dated check, which the pawn broker will cash should the customer not return to pay or extend the loan. Pawn brokers also provide consumers with a location to find quality merchandise at reduced prices. Items that have been purchased outright or that have not been redeemed from pawn are offered for sale to the general public. Jewelry, guns, and electronics are popular categories with buyers. Musical instruments, tools, DVDs, CDs, and antiques are also available at most pawn shops. Customers may also find sterling silver tableware or serving pieces, fine china and crystal, and art. In addition to other services, pawn brokers may serve as a retailer for merchandise that is in demand in their area. For example, they may carry a line of leather motorcycle jackets or serve as an agent for a cell phone company. Many also offer jewelry or watch repair and can provide testing services, such as determining whether an unmarked silver item is plated or sterling or whether a diamond is genuine.
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