Pawnshops serve the community by lending individuals money in exchange for personal property being given as collateral. Most people think of the stereotypical situation of selling items when they hear the words “pawn shop”. Depending on the type of pawn shop and the item, a direct purchase by the pawn shop may be offered. In most cases, however, pawning means that an item is being held as collateral for a loan given to the borrower. Each state has varying rules and guidelines for how pawn shops operate: in Ohio, pawn shops primarily provide collateral-based loans on items such as jewelry, computer equipment, mobile devices, weapons, historic or unique currency, rare metals and gems, and an array of other valuables.
Pawn shops are ideal for individuals who are in need of a loan and have something of value to offer in exchange. Rather than having to sell the item outright, they can bring the item to the pawnbroker, who will inspect the item, its inherent value, condition and other aspects to determine how much it would be worth to the pawnbroker. A loan is not offered in all cases, but when it is, it can be accepted or rejected by the owner of the item.
If accepted, the owner and the pawnbroker will enter into a loan contract. The state of Ohio requires that a state issued form of photo ID (such as a driver's license) be presented at the time the contract is finalized. The information that is included on the ID will be used to fill out the contract. The pawnbroker may ask for additional information, such as a phone number. In addition to this information, a detailed description of the item and conditions of the pawn shop loan will be included in the contract. This process will occur whether the item is being sold or used as collateral, per state law.
All pawn shops and brokers in the state of Ohio are regulated under the Division of Financial Institutions. Regardless of the size of the loan, the minimum period in which a loan may be held is three months, with an additional one-month notice to the item owner. Unlike in many other states, pawn shops in Ohio are restricted in terms of the amount of interest and fees they can charge a borrower. Your loan interest rate will be no higher than six percent for each month it is active and storage fees are held at six dollars per month.
During this time, the borrower has the ability to pay off the loan in full – including interest and any additional fees – The borrower can also choose to pay the interest plus associated fees for the month to keep the loan active and the item redeemable. If a borrower fails to make his or her payment within the specified time-frame or fails to pay off the entirety of the loan by the end of loan's duration, then the ownership of the item is transferred to the pawnbroker and is irreversible. It will then be sold by the pawnbroker to recoup any remaining balance on the loan.
As required by state law, a loan notice is mailed to the last address provided and on file, notifying the borrower of the exact expiration date of the pawn loan. All mailed notifications will result in an additional $5.00 fee that is to be paid at the time of loan renewal or loan completion.