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Pawnbrokers

Introduction

Pawnbrokers, also known as collateral loan brokers, lend money to consumers in return for items of value that range from jewelry and electronics to household goods. Once a consumer, often referred to as a pledgor, sells or “pawns” an item, he or she receives a ticket or a memorandum. This ticket can be used to later redeem the item or to sell it to someone else within a certain time period. Utilizing the services of a pawnbroker is one way for an individual to get cash quickly without a credit check. While most loans are for small amounts of money ranging from $75 - $100, the State regulates such transactions. Further, all collateral loan brokers must be licensed by the locality in which they operate. Moreover, these loans are governed by the federal Truth-in-Lending Act. 1

Click on the link below to find more information about this topic.

What are the costs involved?

The maximum interest rate which may be charged for a loan by a pawnbroker in New York State is four percent (4%) per month. 2 In addition to the interest, a service charge may be assessed. The maximum service charge for loans is as follows:
  • $4.00 may be charged for loans less than $100.00.
  • $7.00 may be charged for loans between $101 and $500.00.
  • $10.00 may be charged for loans greater than $500.00. 3

The maximum period for a loan is fifteen (15) months with a one-time allowable extension of an additional fifteen (15) months if agreed upon by both parties. 4

What are consumers’ rights regarding pawned property?

  • The consumer has a right to pay back the loan and get back his/her property or pledge within a specified time frame.
  • No property or pledge may be sold by a pawnbroker until that item has remained in their possession for at least four (4) months. 5
  • No pledge may be sold unless written or printed notice of intention to sell with a statement of the article or articles to be sold has been first mailed to the pledgor or consumer at the address given at the time of pledging at least thirty (30) days prior to the date of sale. 6
  • If an item is purchased by the pawnbroker via a public auction, the consumer then has an additional ten (10) days to redeem his/her pawn ticket and pay off the loan amount. 7
  • The consumer may sell the memorandum (a.k.a. pawn ticket) which then gives the purchaser of the pawn ticket the right to redeem the property.8
  • The pawnbroker can only buy the ticket if the consumer requests him or her to do so at least ninety (90) days after the original loan was made. 9
  • If the consumer sells the pawn ticket to the pawnbroker, he/she may buy such ticket back within ten (10) days by paying the same price the pawnbroker paid for it. 10
  • If the article pledged is sold, any money in excess of the amount of the loan, interest and lawful expenses of the pawnbroker in the making of such sale shall be paid to the holder of the pawn ticket. 11
  • If the pawn ticket is lost, the pawnbroker must issue a second ticket if the consumer can give an exact description of the item. A fee may be issued to replace a lost claim ticket of one percent of the loan or $5.00, whichever is greater. 12
  • If a consumer changes his/her mind after selling an item to a collateral loan broker, he/she may cancel the transaction within five (5) business days, provided he/she pays the full purchase price, together with a cancellation fee, which may range from $4 - $10, depending on the amount of the purchase price. 13

How will I know my rights?

  • The above information regarding the sale of items traded for cash with a collateral loan broker must be included on the pawn ticket given to the consumer at the time the initial transaction is made. Such section on the pawn ticket shall be entitled “NOTICE OF ELECTION.” 14

What if I have a dispute?

  • If there is a dispute about the rates charged by a pawnbroker or a problem with the return of a pledged item, consumers should contact the local licensing authority where the pawnbroker is located. The local licensing authority may impose fines of $25 - $100 per offense, and may suspend or revoke a license for willful violations. 15

What about collateral loan brokers in New York City?

In New York City, pawnbrokers are licensed by the Commissioner of Consumer Affairs. New York City pawnbrokers must comply with both State and City rules, and any violations by New York City pawnbrokers should be reported to the NYC Department of Consumer Affairs.

New York City Department of Consumer Affairs
42 Broadway
New York, NY 10004
For information call 3-1-1 or visit http://www.nyc.gov/html/dca/home.html

  1. Nationalpawnbrokers.org/faq.htm; 15 U.S.C. § 1601 et seq.↑
  2. N.Y. General Business Law § 46.↑
  3. N.Y. General Business Law § 44 (1).↑
  4. N.Y. General Business Law § 46.↑
  5. N.Y. General Business Law § 48 (1).↑
  6. N.Y. General Business Law § 49 (1).↑
  7. N.Y. General Business Law § 49 (1).↑
  8. N.Y. General Business Law § 44 (2) (d).↑
  9. N.Y. General Business Law § 44 (2) (d).↑
  10. N.Y. General Business Law § 44 (2) (e).↑
  11. N.Y. General Business Law § 50.↑
  12. N.Y. General Business Law § 44 (1).↑
  13. N.Y. General Business Law § 47.↑
  14. N.Y. General Business Law § 44 (2).↑
  15. N.Y. General Business Law § 51.↑

 

Last Modified: July 12, 2010