12 Myths About Pawn Shops (And Why You Might Actually Want To Use One)

Explore the untold benefits of pawn shops that go beyond the stereotypes.
Updated May 8, 2024
Fact checked
woman counting dollars

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Pawn shops have long been a resource for people who need quick cash. But myths surrounding pawn shops have made some people reluctant to use them.

Dispelling some of the following misconceptions might make you more likely to consider turning to a pawn shop the next time you need to add more money to your wallet quickly.

Here are 15 myths about pawn shops you can safely ignore.

If you’re over 50, take advantage of massive discounts and financial resources

Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.

How to become a member today:

  • Go here, select your free gift, and click “Join Today”
  • Create your account (important!) by answering a few simple questions
  • Start enjoying your discounts and perks!

Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.

Become an AARP member now

Pawn shops undervalue your items

M.Dörr & M.Frommherz/Adobe man buying gold jewellry

Pawn shops are for-profit locations, meaning they need to make some money if they sell your item. However, most pawn shops are not dishonest organizations trying to undercut you.

They may not give you retail value for your item, but it should be close. Remember, too, that what you paid for your item initially might not be what it’s worth today.

They just want to keep your stuff

Piman Khrutmuang/Adobe Gold jewelry diamond shop with rings and necklaces luxury retail store window display

Pawn shops don’t want to keep your items if you want them returned. A pawn shop generally wants to meet clients where their needs are, whether that means temporarily holding the item and providing a short-term loan or purchasing the item for cash.

Of course, if you fail to make payments on the money you borrow, the pawn shop will likely keep your stuff.

They knowingly buy and sell stolen items

Prostock-studio/Adobe Sneaky scared robber ready to steal something at home

Pawn shops get a bad reputation in the movies. They are often depicted as the place where weapons and stolen items are bought and sold.

In reality, many pawn shops work closely with police departments to help the cops catch criminals. For example, a pawn shop might hold items for weeks before they sell them to ensure the police have an opportunity to investigate if needed.

Resolve $10,000 or more of your debt

Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.

National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1

How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.

Try it

They should be the last resort for borrowing money

Krakenimages.com/Adobe middle age couple holding dollars

No one wants to give up a precious item — such as a piece of jewelry — to pay a bill. However, using a pawn shop can provide fast cash for anything.

Many credit cards and personal loans have higher fees. In such situations, pawn shops can be a better option for some people.

Payday lenders are better

motortion/Adobe envelope with dollars

Payday lenders often charge high interest rates and fees, making borrowing especially painful. That means you might get better terms by using a pawn shop.

It’s embarrassing to get a pawn shop loan

Vitalii Vodolazskyi/Adobe wooden plate engraved with no credit check on table

A pawn shop is a small business that helps you convert valuable possessions into cash when yo need it. Using a pawn shop can be less embarrassing than borrowing money from friends and family.

Best of all, transactions are fully private unless you talk about them.

There’s no regulation in the pawn industry

wirul/Adobe auditor using calculator and magnifying glass to audit accounting documents

TV shows portray pawn shops as seedy, dark holes in the wall. But that's usually not the case in reality. Pawn shops are like any other business when it comes to regulations.

Pawn shops need to be licensed. As with most lenders, a pawn shop’s financial transactions are monitored.

You have to tell them why you need to borrow

Sometimes, asking for money means having to explain why you need it. That’s not fun to do, especially if you’re asking family or friends.

Pawn shops don’t care why you need the money. You can get a quick cash advance without worrying about explaining the details.

Pawn shops exploit those in need

CameraCraft/Adobe old gray haired woman looking in few coins left on the table

A pawn shop is like any other business and has a goal to turn a profit. But these shops generally provide fair, straightforward terms. You can decide if these terms are well-suited for your needs or not.

Many pawn shops look for repeat business, so exploiting customers is not in their interest.

Earn cash back on everyday purchases with this rare account

Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2

With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!

This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.

Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.

Apply for a Discover Cashback Checking account today

They’ll lose your stuff

experiencesnw/Adobe pawn shop window

Some worry that handing over items such as a family heirloom will result in the item being lost or stolen.

However, pawn shops work to minimize this risk. They know that a lot of people intend to reclaim their items at some point.

Pawn shops are dirty — and everything in them is too

Piman Khrutmuang/Adobe Jeweller hand polishing and cleaning jewelry

Most pawn shops are well-maintained and look much like small retail stores. They also meet all local health and safety regulations, or they wouldn’t be able to stay open.

Also, if the pawn shop ends up selling your item, it will clean it first. That's just smart business.

Pawn shops are filled with items no one wants

LIGHTFIELD STUDIOS/Adobe handsome male jweller in blue suit inspecting gemstone using magnifying glass at work

Take a trip to the local pawn shop with a friend and check out everything lining the shelves. While there may be a lot of items that don’t interest you, other fun, interesting, valuable, beautiful, and unique goods should be available.

If you’re searching for treasure and a bargain, visiting a pawn shop can be a smart shopping hack.

Bottom line

Prostock-studio/Adobe young black woman holding money

In some circles, pawn shops have a bad reputation. But this isn’t always — or even often — deserved.

When you need to boost your bank account, bringing valuable items to a pawn shop could be a good way to quickly pick up some extra cash

And if you are on the other side of the transaction, remember that shopping at pawn shops can often earn you a great deal on something valuable.

Choice Home Warranty Benefits

  • First month free
  • Protection for unexpected expense
  • 24/7 claims hotline
  • Network of over 15,000 technicians

Author Details

Sandy Baker Sandy Baker is a has over 17 years of experience in the financial sector. Her experience includes website content, blogs, and social media. She’s worked with companies such as Realtor.com, Bankrate, TransUnion, Equifax, and Consumer Affairs.
Chris Kissell Chris Kissell is a writer and editor whose work has been featured at Forbes, U.S. News & World Report, MSN Money, Fox Business, Forbes, Yahoo Finance, Bankrate, Money Talks News, and more. He writes mainly about personal finance, insurance and health issues.

Want to learn how to make an extra $200?

Get proven ways to earn extra cash from your phone, computer, & more with Extra.

You will receive emails from FinanceBuzz.com. Unsubscribe at any time. Privacy Policy

  • Vetted side hustles
  • Exclusive offers to save money daily
  • Expert tips to help manage and escape debt