What’s the Difference Between Pawning and Selling?

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We all end up a little short of cash from time to time.

You might be struggling to find a job or simply run out of money before your next paycheck.

And with life being so unpredictable there always seems to be a hidden bill or emergency around every corner.

Thankfully, both pawning and selling your valuable items give you access to fast cash to smooth over the latest financial hiccup.

You might be a little nervous about using a pawnshop but used currently and it becomes a handy source of money without losing your belongings. In fact, pawnshops serve over 30 million consumers in the US each year and 85% of people who take pawn loans successfully pay it back.

If you’re considering pawning or selling something then you’re probably wondering what the difference is and which is better for you. Keep reading for an in-depth look at the difference between pawning and selling, the pros and cons of each and which is best.


Selling vs Pawning: What’s the difference?

The difference between pawning and selling an item can be a little confusing. If you’re deciding whether to pawn or sell something valuable then it is likely that you need cash fast. The good news is that either way will enable you to get the money you require almost instantly. 

The difference between pawning and selling is simple once broken down. Pawning an item means you are taking out a loan from the pawnbroker and leaving your possession as collateral. The pawnbroker then keeps hold of the item until you pay back the loan within the agreed time frame. Should you not pay back the loan, the pawnbroker will keep the value to resell and recoup his losses.

Selling an item means you simply exchange it for cash with no future obligations to the pawnbroker.

If you’re deciding whether to pawn or sell an item there is one major question to answer.

Do you want your item back in the future?

If yes, then pawning is a handy option as you can take a loan in the short term before paying back the loan to get your valuables back. If you don’t need the item in the future and you just want cash then go ahead and sell. Let’s look at the pros and cons of each to help you decide further.

You get more money for pawning then selling

Pawning Pros

Get your valuables back

The biggest advantage to pawning an item is that once you finish the pawn agreement you get your possessions back. When you pawn an item, you use it as collateral for a loan. As long as you pay back the loan under the agreed terms you will get the item back.

Doesn’t affect credit score

Pawnbrokers don’t check or affect your credit score. This is because the loan is secured against the value of the item(s) you pawn. There is no need for your credit history to be checked to get the loan. Plus if you can’t pay back the loan it will not hurt your credit score either, the pawnshop simply sells your item to recover their losses. 

Instant Money

When you pawn an item it’s possible to get cash in minutes. As long as the broker can set a value for the item quickly it’s possible to walk away with a cash loan in less than 30 minutes. As you can imagine, this is super handy if you need money quickly to get yourself out of a financial hole. But be aware this convenience is expensive with pawn loans having an interest rate from between 30% to 300%!

More Money for Pawning

Often, you’ll get more money for pawning an item vs. selling an item. The reason you get more money for pawning valuables is that there is less risk for the pawnbroker. As it is collateral for a loan there is less risk in having to resell the item to make money. Although, you will be paying interest when pawning an item so expect to pay back more than the amount you originally loaned.


Pawning Cons

Could lose ownership of valuable

Pawning is a handy way to get money without selling your belongings. But you need to understand that if you can’t repay the loan you will lose ownership of your belongings. If you don’t pay back according to the loan agreement for the item you pawned then the pawnshop will become the owner and resell it to make their money back.

Item might get rejected

It’s not guaranteed that you can pawn your valuables. Quite often there is not as much value as you may think in your possessions. Pawnbrokers might reject your item if they feel it holds little to no value. Remember, the loan amount is directly related to the value of your item.

Risky for heirlooms

Family heirlooms can hold huge value, especially jewellery which contain precious metals like gold and silver. Many people chose to pawn their valuables rather than sell as they want to keep them in the long run. This is incredibly risky though as you could easily lose your heirlooms forever if you don’t repay the loan. 

Pawnshop keeps hold of the item 

One final disadvantage to pawning is that for the duration of the loan the pawnshop keeps hold of the item. Until you have completely paid back the loan you won’t be able to get your possessions back. Be sure to choose a reputable pawnbroker who keeps your valuables securely and returns them in the same condition.


Selling Pros 

No loan to repay

Selling an item is a simple transaction where you simply trade your item for money. After this, you walk away with the cash and have no further dealings with the buyer. There’s no ongoing fees, repayments or obligations. Deal done.

More places to sell

Choosing to sell something over pawning means you’ll have more opportunities to sell. To pawn your belongings you must use a pawn shop. Selling an item you can sell to a pawnshop plus a number of other places including online marketplaces like Facebook, eBay and Craigslist. If you’re patient you might even be able to get more money for your valuables.

Declutter your life

Over our lives, we all seem to acquire more and more belongings. Selling some of these things can help you declutter your life and get rid of things you no longer want. You could even completely change your life by becoming a minimalist while making some extra money. 


Selling Cons

You no longer own the item

The biggest disadvantage of selling an item compared to pawning it is that you won’t own it anymore. Once you sell your belongings they are gone. The new owner decides what to do with it and has no obligation to sell it back to you. So if the item is important to you then reconsider whether you want to sell it. 

Can take longer than pawning

Selling your valuables at a good price might take longer than pawning. Yes, you can make a quick sale to a pawnbroker but they will likely undervalue your item as they will be looking to resell it for more money. If you want to get better value for selling, then you may need patience to find a buyer at the right price elsewhere from the pawnshop.


Do you get more if you pawn or sell?

If you’re using a pawnbroker to pawn or sell an item, most of the time you will get more money for pawning than selling an item. This is because a pawn loan carries less risk for the pawnshop as they worry less about the reselling price. That being said, you might be able to sell an item elsewhere, such as in a local newspaper or online, for more money.


Is pawning a good idea?

Pawning is a handy way to get money fast without having to completely sell your items. It is a good idea if you need money and know you can pay back the loan to get your valuables back. It may not be a good idea to pawn items you don’t want to lose ownership of such as family heirlooms. Plus if you have a bad credit score, it is an easy way to loan money without this getting in the way.


What can you pawn for $100?

You can pawn almost anything as long as the pawnbroker sees enough value in the item. Let’s say you’re looking to pawn something for 100 dollars here are some ideas:

  • Laptop
  • Playstation or Xbox
  • Jewellery and Watches
  • Golf Clubs
  • Mountain or Road Bike
  • iPad
  • Smartphone
  • GoPro
  • Designer Handbag
  • Guitar
  • HD TV
  • Gun
  • Digital Camera

How long do you have to pay back a pawn?

The length of time you have to pay back a pawn can vary depending on the broker and deal you make with them. The industry standard is usually 3 months to pay back your pawn loan for the date you made the agreement. That being said, every pawn is open to negotiation if you want more time but be sure to negotiate this from the start not once the loan has already started. Failure to pay back a pawn means you’ll lose your possessions forever.


Final thoughts: The Difference Between Pawning and Selling

By now you should have an in-depth understanding of pawning versus selling. 

There’s no right answer to whether pawning or selling is better, that comes down to you as an individual. Ask yourself some simple questions to help decide:

Do you want to keep the item in the long run?

Can you afford to pay back the loan?

Is it worth risking a family heirloom?

Simply put, if you want to keep possession of an item and can pay back the loan then pawning is a good choice. If you just want cash without keeping an item then it’s probably best just to sell.

And remember, pawning carries the risk of losing your valuable forever if you can’t repay the long in time.

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