If you’re strapped for cash, you’ve maxed out your credit cards, and you don’t have friends or family to borrow some money from, you might want to consider pawning a diamond ring.
Pawn shops are on the rise, thanks in part to TV shows like Pawn Stars. When you pawn a ring or any other piece of jewelry, you’re applying for a loan in exchange for that ring. Typically, you have 30 days to pay the loan back. If you default, the pawnbroker will own that ring and has the right to sell it to make profits.
If you’re considering pawning to generate some much-needed cash, here is what you need to do:
1. Clean your ring.
Use a soft-bristled toothbrush to clean your ring, paying attention to the stone and the prong underneath. Karat markings inside the band may have been exposed to oils and dirt from your body, so make sure to focus on that area too. You are more likely to win a bigger loan with a clean-looking ring.
2. Take an appraisal with you.
If you have an appraisal done within the last two years, take it with you. This will help the pawnbroker understand the important details about your diamond ring, such as the carat, clarity, color, and the type of metal used for the band.
3. Get familiar with the terms.
Terms differ from one pawn shop to another, so you should read and understand the fine print before pawning your diamond ring. Interest rates range anywhere from 6% to 25% and holding periods can be 30 to 90 days depending on the broker.
4. Don’t be afraid to negotiate.
Haggling is expected at pawn shops, so do your best to raise your loan or lower the rates as much as you can. If your ring has historical value or if it has emotional value to you, you are in a better place to ask for higher loans from the pawnbroker.
Remember, pawning a diamond ring does not mean you will get the retail price of your ring. Pawn shops have to be able to sell your ring at a profit if you default on your loan, so don’t go in with the expectation that you’ll get $1,000 for a $1,000 ring.