Frequently Asked Questions About Pawn Shops

What can you expect when you take out a pawn loan at Best Collateral? How does a pawn shop work? Though many pawn shops across the country have similar workings, we adhere to the laws and regulations set by the State of California.

How does a pawn shop work?

People often need to borrow small amounts of money that other lenders are not willing to provide. Best Collateral lends money on items of value ranging. These items include gold and diamond jewelry, musical instruments, televisions, tools, household items, etc. Typically, loans are small, averaging between $70 and $100. They can be as small as $10 or as high as several thousand dollars, depending on the value of the collateral. The contracted loan period is 4 months in California, with a 15 day grace period. However, you can renew or redeem the loan at any time. All fees are regulated by the state.

Sometimes a customer prefers to sell their property or trade it for an item for sale in our shop. We offer more money in this case, because we do not have to provide storage for the item while it is in pawn.

How do you determine a loan amount?

Our professional staff bases pawn loan amounts on the value of your item—its current appraised value, its current condition and our ability to sell the item. We use all the research tools we have at our disposal to determine an item’s value and get you the most money we can. The amount of the loan offered is based on the wholesale, resale/secondhand value of the item, not the new price.

Do I need identification?

The state requires us to use only a state issued drivers license or state photo ID card as identification each time a customer sells or pawns an item. We also accept US and International Passports and Matrícula Consular id cards. We may know you personally, but that does not exclude you from showing your identification at the time we make the transaction. The state requires us to check for updated information on every transaction. By law, we report a complete description of the customer and all items received by a pawnbroker to the police. Police subsequently compare pawned and sold property to their burglary, robbery and theft reports. This reduces the chances of a pawnshop receiving stolen property.

What is a Loan Renewal?

If you are unable to pay back your loan in full on its due date, you may get a renewal. First, you must pay the interest that has accrued on your loan. Next, we write a new loan. The principal loan amount remains the same, as does the interest rate. In addition, we’ll reset the due date for the full loan term.

What is a Loan Redemption?

When you are ready to pick up your merchandise, simply return to Best Collateral with your loan receipt and pay off your loan including principal, interest and any fees.

What is the foreclosure procedure?

A customer defaults on a loan by not paying a loan in full or the interest charges due, by the contracted date. After a 15 day grace period, the collateral becomes the property of the pawn shop and can be sold.

Can a pawnshop sell my pawned item?

The title and ownership of an item remains with the borrower until the loan defaults. A pawnbroker is not able to sell a pawned item until the borrower fails to redeem or renew a loan at the end of the contracted period.

Do most customers lose their merchandise?

On average, 80%+ percent of all Best Collateral loans are repaid. Repeat customers make up much of our business. Some customers borrow against the same items regularly. If the borrower chooses not to repay the loan and interest charges, we must try to recover our investment from the item left in pawn. Best Collateral very much prefers that customers return for their property.

Do Pawnshops deal in stolen merchandise?

Despite what you see on TV or in the movies, pawnshops are the worst place to get rid of stolen merchandise. Pawnshops are tightly regulated and work very closely with local and federal law enforcement agencies. We describe everything that is pawned or sold to us in detail to law enforcement. In addition, we must submit the required information from the customer’s identification with these reports. Reports are mandatory, and we report daily to the police. Our video surveillance equipment also verifies customers’ identities.

Does Best Collateral deal in firearms?

Best Collateral has only one location that is a licensed firearms dealer. This is our South San Francisco location. All other Best Collateral locations do not deal in firearms.

Are pawnshops regulated?

Yes. States have regulated the pawn industry for decades. In addition, local authorities oversee licensing and regulation of most pawnbrokers. We are subject to laws such as Truth In Lending Act, Equal Credit Opportunity Act, Fair Credit Reporting Act, Patriot Act, and Federal Trade Commission Rules on Data Privacy and Security Transfer. At the federal level, regulatory authorities include the Federal Trade Commission (FTC), Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and the Treasury Department.

Do I have to remember when my loan is due?

No. Best Collateral sends out a courtesy reminder notice to all its loan customers at the end of their 4 moth loan term. This reminder provides our customers an additional 15 days to come in and redeem their item, or, if they wish to conserve some of their cash, just pay the interest and fees and have another 4 months to pay back the original amount borrowed.



If you still have questions or you’re wondering how does a pawn shop work, find a store and speak with one of our friendly staff members.