Pawnbroking
Introduction to Pawnbroking
Pawnbroking, in law, business conducted by a pawnbroker, a person who lends money, to be repaid within a given period, on the pledge or pawn of personal property other than negotiable paper and negotiable instruments. Loans can be made by a pawnbroker only on articles that can be left as collateral by the person requesting the loan. In the U.S. pawnbrokers are subject to state regulations and municipal ordinances. State regulations usually provide for a license and a bond, and set the rates of interest to be charged and methods of disposition of unredeemed property. In most states interest charges are regulated with either an interest rate that varies according to the size of the loan or with a uniform rate that operates irrespective of the loan amount. In the latter case extra charges are usually permitted to cover the cost of handling small loans. Municipal ordinances often place pawnshops under police supervision, providing for daily inspection or daily reports. The pawnbroker has the legal right to retain the articles pledged until the loan is repaid; if repayment is not made within the specified time, he or she may sell the articles and be reimbursed from the proceeds; such merchandise is usually sold to the public or to dealers at auctions. The borrower has the right to redeem property at any time before a sale takes place.” (1)
Resources
Notes and References
- Information about Pawnbroking in the Encarta Online Encyclopedia