How the loan works. You have to pay the loan amount back, plus fees—usually interest and a storage fee—by your deadline, which is typically a month or several. If you don't pay it back by then, the pawn shop has the right to sell your item. But pawn shops are often happy to extend the loan, since that is, of course, a big part of how they make money. According to the National Pawnbrokers Association, 80 percent of all customers do end up reclaiming their items.
Finance charges. Interest rates can range from 3 to 25 percent of the cost of the loan, depending on the state. In Michigan, where Gold's shops are located, the interest rate is 3 percent, and consumers are also charged $1 per month in storage fees. So if you took out a $100 loan, over three months, you'd pay $9 in interest and $3 in storage fees, says Gold.
How much money you'll likely get. Maybe not as much as you think. Gold says pawn stores will typically pay 60 percent of what the person paid for the item. So if you have a baseball collection that is determined to be worth $500, you'll probably get $300 for it.
"If we gave more than that amount, they'd have to reason to come back and get it," says Gold. "Most of the people we give loans to come back and get their item."
In a worst-case scenario, of course, you could lose your item, or if it's extremely sentimental and valuable to you, you could wind up extending the loan and paying fees indefinitely to the point where you would have better off doing almost anything else. So here's some common-sense advice: Anything you pawn should be something you may not want to lose but won't be emotionally devastated if you do.
Meanwhile, if you're told something isn't worth what you know it is, you can do a little pushback. When MacGregor felt she received a low-ball offer on a loan based on what her mother's diamond ring was worth, she insisted it was worth more. The pawn shop had the ring examined by a jeweler to ensure it was a real diamond, and she was offered more—$350, which the pawn store said was the absolute most it could offer.
MacGregor took it and was able to pay the loan and get her ring back. She later had to pawn the ring again, but says business has picked up and she doesn't envision having to do it again.
Pawn shops aren't interested in sob stories. It sounds harsh, but that's the reality, says Gold, who explains: "We can't give you more money because it belonged to your grandmother, or this is something that your mom gave you before she passed away."
Gold says pawn brokers are sympathetic to the fact that the power tools or diamond broach you're parting with might have sentimental value, but that sympathy won't translate into more dollars. For the pawn broker, who has to offer a loan low enough to be able to sell the item for a profit in case the loan isn't repaid, there's no intrinsic value in hearing your tough-luck tale.
"You can't sell a story," Gold says.