A pawn shop is a store that offers money, usually a fraction of the value, for a variety of different items. Such stores have existed as far back as Ancient Greece, with differing rules for how they operate. Normally a person pawns an item at a shop and then has a month or two to redeem it by paying back the money owed. There is usually an additional charge or fee that must be paid prior to getting the item back.
What the pawn shop in modern times cannot do is sell the item before the specified date when a customer can still redeem it. If someone really wants to buy an item, the owner may contact the customer who pawned it and ask him or her if they can sell it. They more offer a bit more money to the customer if the item is in high demand.
The pawnbroker may also take some items on consignment. Instead of offering money to the client right away, he may offer money only if the item is sold. Usually, the profits earned are split between the store and the previous owner. Further, sometimes the pawn shop offers people an opportunity to merely sell their items, which gives the store, in most cases, the ability to sell something right away. People who sell instead of pawn their items usually get slightly more money for the sale.
Still, the pawn shop usually offers far below market rates for anything that is pawned. This is because it can — many people who must pawn something and can’t wait to sell it at market value are in desperate need of the money. Further, every purchase is a venture. The pawnbroker might end up with an item he can’t sell or doesn’t sell for the price he wants. Therefore, the lower than market value price may offset money lost on items that never sell, and also help to support the shop staying in business.
In the US, there are strict rules regarding the running of pawn shops, the length of time a pawnbroker must wait to sell an item, and sometimes even the percentage of the market value at which an item can be pawned. These rules vary from state to state. Some of the rules are built to protect the potential customer, and others are designed to make sure that any goods that are stolen, that might be knowingly purchased by a pawn shop, can be traced back to the seller, and possible thief.