Have you ever gone to a pawn shop to trade in an item for some cash and wondered why the pawn shop gave you the offer that they gave? If so, it helps to know how pawn shops come up with the value for items that you pawn for cash.
Pawn Shops Look At Used Prices Online
When it comes to determining how much an item is worth, it is very common for a pawn shop to look at how much the item is selling for online. They will do this by going to various online auction websites to see how much an item is going for with previously sold items or auctions with active bidders. This is commonly done when the pawn shop owner or employee is not completely familiar with the value of an item and needs to make some sort of determination on the spot.
Pawn Shops Look At Local Demand
Another factor that is used when pricing your item is the demand for it in the local area. For example, if you are trading in power tools and the pawn shop is known for having quality power tools, then the pawn shop is more likely to offer you more for your tools because they know that the item will sell quickly and at a high value. If the item is not in demand and chances are high that it will sit in the pawn shop for years until they can find a buyer, then the pawn shop will likely not give much for the item.
Pawn Shop Use A Percentage Of The Price That The Item Is New
When in doubt, a safe method to use to determine the value of the item is to look up how much it costs to buy the item new today and know that you'll get a small percentage of the item's worth. This percentage could be anywhere between 10-30% of the item's retail price. While this may seem low, you must remember that the pawn shop needs to make a profit if they end up keeping the item because you do not come back to pay your loan.
Pawn Shops Use Appraisal
In some situations, a pawn shop will use an appraisal to determine how much an item is worth. Much like with the previously mentioned rule, you'll be given a small percentage of the appraised value for them to give you the loan that you need.
To learn more, contact a pawn shop.