We’ve put together the answers to some of our customers’ most frequently asked questions to help you learn more about our Dearborn pawn shop and the pawning process.
How does a pawn shop work?
Pawn shops lend money on items of value ranging from gold and diamond jewelry to musical instruments and electronics. The money they loan is based on the value they give the item. Our pawn contracts in Dearborn, Michigan are for three-month terms at an interest rate of 3 percent per month plus $1 per item for storage. (These rates are among the lowest in the country.) Once the pawn loan is made, the collateral, or the items being pawned, are stored in either a secure vault or a safe warehouse until the loan is paid back. The loan may be paid back at any time within the three months, and it can be renewed for additional three-month terms.
Why would someone choose a pawn loan over a payday advance or even using their credit cards?
Pawn shops offer consumers a quick and easy way to borrow money. Pawn shops offer fast cash with no credit checks, and there are no legal consequences if the loan is not re-paid. Pawn loans do not carry hidden fees or outrageous interest rates like payday loans or credit cards often do. Payday lenders often charge an APR in excess of 800 percent, while Michigan pawn shops only charge an APR of 36 percent. VIP Gold Rush also gives a 14-day grace period after the three-month term is up.
Do most pawn customers redeem their merchandise?
Yes. On average, 85 percent of all pawn loans at VIP Gold Rush are re-paid. Repeat customers make up a large portion of our business, which enables us to establish very good relationships for a successful business.
Do all pawn shops in Michigan charge the same rates?
No. Pawn shops are legally not allowed to charge more than 3 percent per month in Michigan. Unfortunately, many shops who advertise as pawn shops are not actually licensed to make pawn loans. Beware of those who offer buy/sell options or buy-back contracts. If a pawn shop in Michigan charges more than the legal rates of 3 percent per month plus a $1 storage fee or offers less than a three-month contract, please do not pawn your items with them. VIP Gold Rush has been fully licensed and insured for over 30 years and offers the highest value for your items along with the lowest interest rates.
Are many of the items in pawn shops stolen?
No, actually less than one-tenth of 1 percent of items sold in pawn shops – or 1 out of every 1000 items – is determined to have been reported stolen. Pawn brokers work very closely with law enforcement to ensure that all people attempting to sell stolen merchandise are caught and prosecuted. All those interested in pawning merchandise must provide valid identification, must be at least 18 year old, and must be fingerprinted. All transactions for the day are then forwarded to the local police departments.
What is the difference between buying at a pawn shop and buying at a retail store?
The difference is the price. Merchandise at our pawn shop is generally available for one-third of one-half the price found of the same items found at retail stores. You can get the same great quality for a much lower price.