Typical Transaction. A typical transaction begins with a potential borrower coming into a pawnshop with the item he or she wants to pledge. The pawnbroker then determines how much to loan the patron for the item. Loans are paid out at a rate of about one-third to one-half of the price the broker can expect to receive for the sale of a good during the worst of times. This assures that a profit will be made.

Suitable goods of Value. As with a bank, pawnbrokers need collateral for a loan. You must pledge an item of value for a loan. The value of the loan is based on the resale, secondhand value of the item, not the new price. There are some items that cost a great deal new, but as a specialized item, they are extremely difficult to resell and therefore receive a low loan value. There are some very popular items that attract a high price and therefore the loan value will be much closer to the new price of that item.

Identification. Government issued photo identification is required of all persons making a pawn loan. We may know you personally, but that does not exclude you from presenting identification at the time the loan is processed.

Statutory Regulations. Today, statutory regulations of banking and finance are based on the legal foundation established by pawnbrokers. Many of the first leaders in the banking industry had roots in pawnbroking. As was the case 3,000 years ago, pawnshops continue to be a source of convenient credit for individuals in need of a short-term loan.

• Membership in the National Pawnbrokers Association has in risen from 50 in 1988 to more than 3000 today.
• In 1911, there were 1,976 licensed pawnbrokers in the country, or about one for every 45,700 citizens. In 1988 there were approximately 6,900 pawnshops in the United States, one for every two commercial banks.
• There are between 12,000 and 14,000 pawnshops in operation throughout the United States today.
• Pawnshops made about 35 million loans in 1988.
• Between 70 and 80% of all items pawned are redeemed.
• As many as 10 percent of the adult population are served by pawnshops each year.
• According to an article entitled "Cash Customers" in Forbes Magazine (May 1993), 25 million households representing more than 75 million people do not have a bank account. People without bank accounts would find it extremely difficult, and most likely impossible, to obtain a credit card or obtain a loan from any other legitimate source than a pawnbroker.

Formerly a male dominated industry, today women are also making their mark as pawnbrokers. Pawnshop clientele are represented in a range of ages (must be 18 or older), races and genders with male and female customers being about equal. As the public becomes more educated about the types of services pawnbrokers provide, pawnshops are serving a wider and more diverse clientele.

All items received by a pawnbroker must to be listed with the city, county, or state police authorities that will compare pawned and sold property to burglary, robbery and theft reports, and therefore reduce the chance of a pawnshops receiving stolen property. This reporting assists law enforcement and the pawnbroker recover and return to the rightful owner property the has been misappropriated.

The pawn industry is one of the most regulated in the country. Most regulation has been initiated, sponsored and supported by pawnbrokers. Regulatory agencies include the offices of consumer credit, and law enforcement on a local and national level.

Pawnbrokers have state, regional and national industry associations which work at self-policing the industry. In the case of public companies, the Federal Securities and Exchange Commission have additional requirements placed upon their operations.

Pawnshops serve as a source of credit to millions of Americans, providing small-secured loans for a brief time period.