How To Be a Pawnbroker

Did you know that pawnbrokers are members of an ancient profession operating in the Middle East, China, Greece and Rome – in much the same way that they do today?  There are even several television shows, including hit TV reality show Pawn Stars, about owning and running a pawn shop.

What is a pawnbroker and what do they do?

A pawnbroker is an individual or business that offers secured loans to people, with items of personal property used as collateral.  When someone borrows money from a pawnbroker, he or she has the right to reclaim the personal items used as collateral within a set period of time by replaying the loan and interest.  If the loan is not repaid within that set period of time, the pawnbroker can sell the item to the general public.

Pawnbrokers need to keep careful records and be cautious not to take in stolen goods.  A pawnbroker must use good judgment and have a general knowledge of all the various items that are brought into their shop for pawning.

How to get a Pawnbrokers License:

1. Submit a pawn application form to the non-depository division of the Department of Financial Institutions in your state.  States vary, but most will ask for a personal affidavit, employment history, credit check, criminal background check and fingerprints from your local police department, and financial statements with your assets and net worth.
2. Apply for a sales tax permit and federal tax ID, as well as a Federal Firearms License if you want to sell guns.
3. Many states require a surety bond in order to secure your license.  The bond protects customers who have pledged assets for a loan in case the pledged assets are sold, or honoring the sell back price and interest cost agreed upon, etc. Various states require different bond amounts, usually running from $1,000 to $25,000.  

Pawnbrokers provide a valuable service to consumers that encounter sudden financial emergencies for loans that are not offered by banks and other traditional lending institutions.Ashton Agency has been providing license surety bonds to Pawnbrokers for over 45 years.  We can supply your pawnbroker bond in most any state you are located.

Visit our website at http://ashtonagency.com or call (800) 451-4854 to speak with one of our helpful customer service representatives. We can provide you with a free quote within one business day, so call now!