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While they’ll buy nearly anything of value, pawn brokers are particularly excited to purchase gold. You’ve likely figured this out by the signs promising cash for the precious metal outside of most of these shops. Unfortunately, selling gold to pawn shops can cost you substantial profit.
There are many reasons someone may choose to take their gold to a pawnbroker. More often than not, though, it’s because they need quick cash. Of course, this is an understandable motivator. Fortunately, there are other quick options for selling precious metals.
At Silver Gold Bull, we want people to know exactly what they’re getting. This means providing information for both buying and selling precious metals. If you’re thinking of selling gold to pawn shops for some easy cash, this guide might just change your mind.
How Does Selling Gold to Pawn Shops Work?
While many of them may look seedy when you drive by, pawn shops have played an important part in the world’s history. Pawnbrokers were history’s first option for consumers who needed loans. Even in the ancient world, owning valuable collateral could get you quick money.
Of course, consumer loans aren’t all that these shops offer. You can also take in a valuable item and sell it outright. This will get you a few extra dollars, but your item is no longer yours. This is the route many people take. Unfortunately, selling gold to pawn shops rarely results in a profit.
This is because — like all other businesses — pawnbrokers need to make money. So if you sell your gold outright, they’ll typically place it up for sale immediately. If you only take a loan out on your precious metal, they’ll store it and charge you interest. Here is how that process plays out:
- You take in an item of value and receive a loan offer.
- If you accept the offer, you’ll receive a pawn ticket. Do not lose it.
- You’ll sign paperwork detailing the terms of the loan.
- The pawnbroker provides information on the length of the loan.
- You have a set amount of time to repay the loan and fees to reclaim your item.
- If you don’t pay before the deadline — typically less than four months — you forfeit the item.
If you’re just seeking a loan and not selling gold to pawn shops outright, pay close attention to the terms. Every state has its own regulations for these retailers, and many of them focus heavily on interest rates. These shops typically have “finance charges” ranging from 5% to 25%.
Unfortunately, this doesn’t tell the entire story. For instance, Indiana caps these fees at 36% per year (i.e., 3% per month). Since they can also add on a 20% monthly service charge, though, you could end up paying 23% interest every month until you retrieve your gold items.
This certainly seems like a lot of money, but in reality, those selling gold to pawn shops often don’t plan on picking it back up. If you fall into this category, you may be more concerned about the pros and cons of using pawn shops to liquidate your precious metal assets.
The following sections will go over these aspects.
Pros of Using Pawn Shops to Sell Gold
Maybe you’ve spent years buying American Gold Eagles, or perhaps you just inherited your grandmother’s jewelry. Either way, there are a few positives to taking your gold into a pawn shop. These include:
You Don’t Have to Sell
Keep in mind that taking out a loan on your gold is an option. If you’re not overly excited about the idea of giving up your precious metals, you can certainly just offer them as collateral. You won’t get nearly as much money, but this method can provide a quick cash influx.
They’ll Buy Just About Anything
Do you have a stash of rare and vintage gold coins? Pawn shops will take it. What about broken jewelry? They’ll take that too. What if you have a vial of gold dust? In most cases, you can expect them to take that as well. You can bring in nearly any item of value when selling gold to pawn shops.
Why You Should Never Sell Gold to Pawn Shops
The benefits of pawn shops might sound great, but there’s a reason they’re not used by all gold sellers. In fact, the disadvantages of selling items in such an environment might make you wonder why anyone else is doing so.
Don’t Expect a Fair Price
If you decide to pawn your gold temporarily, you can expect to get between 25% and 50% of its actual value on average. Selling it outright may net you an extra 10%, but this means you might get as low as 35% of your precious metal’s value when selling gold to a pawn shop.
Broker May Mislead You
The Consumer Financial Protection Bureau has taken action against many pawn shops. This is most often due to brokers misleading consumers about costs. There’s no guarantee you’ll receive unfair treatment when selling gold to pawn shops, but there’s also no guarantee that you won’t.
Store Credit Is Misleading
In many instances, pawn shops may offer you a higher price if you’re willing to take it in store credit. If you go this route, though, don’t think that you got a deal. They build these “deals” into the prices you already see, and if you’re using store credit, you can forget about the prospect of haggling.
If You Miss Your Payment, It’s Gone
If you’ve decided to just take out a loan on your gold, it’s important that you take the broker’s terms seriously. If you’re even a day late on making a payment or closing the loan, the pawn shop can immediately sell your item. This means you likely got a fraction of your gold’s value.
Alternatives to Selling Gold at Pawn Shops
If you’re thinking of getting cash for your precious metals, you should at least consider alternatives to selling gold at pawn shops. These will typically net you far more money, and in many cases, you can get cash fairly quickly.
Reputable Online Dealers
Some of the best alternatives to pawn shops are reputable online gold dealers. You can get a quote for your precious metal items, mail them in, and have your money sent to you. At Gold Silver Bull, we deposit your money one day after verifying your items.
Selling on eBay
While it’s not ideal, you can also sell precious metals on eBay. It’s almost the exact opposite of selling gold to pawn shops. Rather than giving away your items for peanuts, you’ll have people around the country vying to win your auction.
Of course, there are several disadvantages to this route. First, you may have to wait for eBay to transfer your money. And even when you get it, you’ll end up paying fees on the auction, the final value, and even to have your money deposited to your account.
Local Coin Dealers
If you’re selling precious metal currency rather than gold bullion bars, your local coin dealer may be interested. In fact, your profit might be much more substantial than if you were selling gold to pawn shops. That’s because these dealers will typically understand numismatic value as well.
Of course, local dealers have the same goal as pawn brokers. And since their consumer base only comprises the surrounding community, they must offer much lower values in order to turn a profit. This isn’t an issue for national dealers like Silver Gold Bull.
Sell Your Gold for a Fair Price Today
Pawn brokers played a substantial role in the evolution of consumer loans. And when you consider how helpful they are to some people, they still serve a purpose to countless individuals around the world. If you’re looking to sell precious metals, though, it’s best to consider another option.
While it’s normal for resellers to offer below spot value, getting one-fourth of your gold’s value is unacceptable. Especially since a Bullion Loan from Silver Gold Bull can get you up to 70% on spot price. Selling gold to pawn shops won’t get you anywhere close to this.
At Silver Gold Bull, we understand how important it is to get a fair price. That’s why we pride ourselves on our guaranteed offers. And since we know people occasionally need quick cash, we offer next-day payment once we verify your metals. Don’t lose money by selling gold to pawn shops.
Visit our Selling Precious Metals or Bullion Loan page to get started.
