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Arizona Pawnman How Pawning Works
How it Works
The basic premise of a Pawn Shop or Pawnbroker is simple. The fact is Pawnbrokers existed long before banking institutions became an everyday part of our society. The Pawnbroker has a license to loan money to consumers, just like the banker does. But the pawn shop is unique because the consumer is able to obtain a loan by simply leaving collateral (merchandise of some value) with the pawn broker for the amount of time that he/she needs use of the money (the loan). This is usually 90 days or less. If the customer repays the loan within the allowable time frame, the collateral (merchandise) is returned to the customer.
If the customer defaults on the loan (does not pay the money back), at the end of the specified time frame, the pawnbroker then keeps the collateral — and the customers owe nothing. The pawnbroker may then sell the merchandise (former collateral) to recover the loaned amount.
Unlike other financial institutions, leaving collateral with the pawn shop acts as the sole condition of the loan. The customer does not need to qualify for the loan by having good credit, a bank account, produce a current pay stub or provide any kind of references. All the customer needs to do is provide acceptable identification and collateral (merchandise of value) to the pawnbroker as protection against default on the loan.
Most states including Arizona regulate the pawn industry quite closely. These regulations protect both the customer and the pawn shops. At Arizona Pawnman, we support the pawn laws in the Arizona in which we do business, and we will always remain in compliance.