How to Become a Pawnbroker in the US

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Sometimes money gets tight, especially when you need it urgently. You could get a loan from a bank, but its bureaucratic application processes mean you may have to wait at least a day or two. So what do you do? You do business with a pawnbroker!

Pawnbrokers are entrepreneurs who operate in the financial services sector. They offer cash loans secured with personal assets such as jewelry, electronic devices and farm tools. If you have a high level of business acumen, and you are a risk taker, you should consider becoming a pawnbroker.

See Also: How to Become a Loan Officer

1. What Do Pawnbrokers Do

The duties of pawnbrokers include:


  • Estimating the value of pawned items
  • Examining electronic devices and tools to determine whether they are functioning properly
  • Weighing and inspecting the purity of diamonds, gold and other jewelry
  • Rejecting items that are in unsatisfactory condition
  • Negotiating loan amounts with customers based on the value of the pawned items and how much they need
  • Signing a contractual agreement and immediately disbursing the money
  • Selling the pawned items in the event that customers fail to return the money (plus interest) within the contractual period
  • Ensuring the pawn shop is appropriately registered or licensed
  • Keeping business records
  • Supervising sales assistants.

Many pawnbrokers assume the risk that a pawned item may not genuinely belong to the client. In short, they don’t give a heck whether the item is stolen or not. But if a stolen item is traced to a pawnshop, then pawnbroker has a duty to give evidence in a court of law.

2. Work Environment

Pawnbrokers usually work in their business premises, Monday through Saturday. Their shops typically operate within the traditional business hours, 9am to 5pm, and till noon on Saturday.

3. Salary

Pawnbrokers are entrepreneurs, so the money they make largely varies by the number of loan sales they make. On average, Payscale says pawnbrokers make between $17,307 and $46,346 annually.

4. Education and Training

There are no specific entry requirements for pawnbrokers. As long as you have the startup capital, and you are an astute businessperson, you are good to get started.

But it is unwise to establish a business in an industry you know little about. Therefore, it is ideal to start as a pawn sales associate, a position that typically requires a high school diploma and good sales and customer services skills.

After gaining a substantial amount of experience, pursue pawnbroker courses offered by the National Pawnbrokers Association. The short-term (not more than a week long) courses provide training in:

  • Jewelry grading
  • Methods and types of disposition
  • Storage of pawned items
  • Legal requirements for pawnbroking
  • Important of pawn contracts.

Besides, the courses, the NPA organizes industry events, which you should attend to keep abreast of developments in the industry and network with other brokers.

5. Career Development

As an experienced pawn sales associate with NPA training, you can start your own pawnbroking business.

Several states require pawnbrokers have a license in order to engage in business. The requirements vary from state to state, so be sure to verify you state’s exact requirements. In general, however, you will need to:

  • Submit information about the physical location and ownership structure of your business
  • Obtain a sales tax identity number for your business
  • Pay a pre-determined surety bond
  • Pay licensing fees

You may also need to obtain a second hand dealer license, since you may need to sell the pawned items.

Be sure to thoroughly read and understand you state’s pawnbroking regulations. A violation may result in fines that could hurt your business.

6. Important Qualities

To be an accomplished pawnbroker, you need:

  • Superb business skills (you must be able to identify a suitable location for your shop and set competitive interest rates)
  • Strong sales and communication skills
  • Strong customer-service skills
  • Strong negotiation skills
  • Strong analytical skills to assess the worth of items
  • Good supervisory skills to manage sales associates
  • A keen attention to detail
  • Good practical and technical skills
  • Good record keeping skills
  • Good organizational skills
  • Good financial management skills

7. Industry Outlook

Pawnbrokers provide a unique and important form of credit intermediation for people in a tricky situtation position. As long as the gap between the haves and have-nots keeps widening, the demand for pawn loans will keep increasing. Banks are also not making life any easier for most of the population, as their loaning procedures put off potential clients. In addition, pawn loans don’t affect credit scores in any way.

So if you are interested in being a self-employed professional, and you wish to offer financial solutions to people in all kinds of financial quagmires, then you could become a pawnbroker.

20 percent discount
20 percent discount

(Success Tip: Read, or re-read the Merchant of Venice)