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How Do Pawn Shops Make Money


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Your local pawn shops make money by providing pawn loans, reselling belongings like jewelry, firearms, tools, and sometimes by offering auxiliary services, like money transfers. Earning interest on loans and profits on retail sales are the principal income sources for a pawn shop. Pawn shops typically aim to generate overall net profits of at least 15% to 25%.

Providing Loans

The first revenue source for a pawn shop is income from providing loans and earning interest on the loan balances. A pawnshop makes a loan to a person who turns over custody of an item, such as a television or jewelry, that serves as collateral for the loan. The amount a pawn shop is willing to lend is based primarily on the value of the item, but it can also be substantially affected by the pawn shop's current inventory at the time of the loan.

For example, if a person is looking to borrow money using a television as collateral and the pawn shop's inventory is already overflowing with similar televisions, the pawnbroker will typically offer to lend considerably less money than if it were low on inventory for televisions.

Terms for a Pawnshop Loan

Pawn loans are a quick and easy way to borrow money without a credit check. Loans are based on the value of your collateral, not your credit rating or pay schedule. A typical pawn loan has a term length of 30 days, plus a 30-day grace period. Pawn shops are generally willing to extend loans indefinitely as long as the interest is being paid.


The second primary source of income for a pawn shop is retail sales. Merchandise includes items that the pawn shop has purchased outright from people and items that were pledged as collateral by loan customers who then were not able to pay back their loans, which means forfeiting the collateral property to the pawn shop. Some examples of items that pawn shops look for to add to their inventory include firearms, tools in good condition, working electronics (the newer, the more cash in your pocket), and jewelry like gold or silver necklaces and bracelets, engagement rings, diamond earrings, high quality watches, etc. If you have items you are interested in selling but not sure of their value, visit your local pawn shop.

Pawnshops generally offer more money to purchase your items outright than they offer to lend against the items because they know that they will have the items available for immediate resale to other clientele. Items that the pawn shop eventually acquires through loan defaults may offer them higher or lower profits in the end, depending on the items and the length of time the loans were carried.

If a loan was maintained for a lengthy period of time, the pawnshop may have already made a profit just from collecting the interest payments made prior to default. However, the length of time may also mean that the item has deteriorated in value to the point where it has little or no resale value.

Auxiliary Services

Some pawn shops also provide what is referred to as auxiliary services to supplement their income by offering extra services for which the shops charge a fee. Typical extra services offered by pawnshops include check cashing, cell phone activation, money transfer services, and bill payment services. Some pawn shops also act as shipping locations for UPS or FedEx!

When you are looking for gifts, household items, or are in need of a loan, remember the Alamo, on Transmitter Road in Panama City! We have a huge inventory and are always looking for new inventory if you are looking to sell for quick cash. We also provide quick confidential loans on just about anything of value.

At Alamo Pawn Shop in Panama City, pawn loans are a quick and easy way to borrow money without a credit check or hassle. Loans are based on the value of your collateral, not your credit rating or pay schedule. A typical pawn loan has a term length of 30 days, plus a 30-day grace period. If you cannot pay back your pawn loan in full, including any applicable grace period, we offer extensions to give you extra time. You may also choose to surrender your collateral as payment in full. 

We also have a great layaway program! Just about any item in the store is available for layaway, with only 20% to hold your purchase. There is never an extra charge for this program, everything you pay comes off of the price of the item. Just pay that 20% every month, and in 4 months, it's yours!

Stop by our shop or give us a call at 850-872-0700! 

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