BY: Greg White
POSTED March 21, 2023 IN


“Isn’t pawning and selling the same thing?”

Simply put, the answer is no. Pawning an item, and selling an item are two different transactions. We are aware however that some may not understand the difference. Here, we’re going to explain the difference in both transactions.

When a customer pawns an item, they are receiving a collateral loan for their pledged item. The customer can redeem their item at any time only after paying off the collateral loan in full. If the loan defaults, the item is then put out for sale.

When a customer sells an item, they are selling their item outright to the store as inventory. Like a pawn transaction, the customer receives a ticket reflecting the transaction. However, there is no interest or repayment involved. It is a final sale. After a certain period of time, dependent upon state and county laws, the item can be put out for sale by the store.
It seems pretty simple, but there a couple of reasons why you should know the difference when bringing in items:

  1. If you pawn an item with the intention to sell and the loan defaults, this can ultimately hurt your return ratio. The return ratio determines how likely you are to return and redeem your loan based on your complete transaction history. Customer return ratios, and transaction history are generally factored in during the loan process.
  2. If you sell an item with the intention to receive a loan, your item could be placed on the sales floor and sold with no way of recovering your item.

Knowing the difference between the two transactions will ultimately help you make a better decision. Typically, selling an item can net a little more cash because interest is not a factor when negotiating amounts. If you have no intention to redeem your item, it’s better to just sell it outright.

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