If you find yourself a little short of cash following the holiday season, you may decide to take some of your jewelry to the pawn shop. Once there, if you choose to pawn it, they will give you cash for a short period of time in exchange for them holding on to your jewelry. While this is a pretty straight forward transaction, there are some questions you will want to ask before you sign your name on the dotted line. The answers you receive will vary from shop to shop.

What Are Your Total Amount Of Fees?

The maximum amount of interest charged by pawn shops is controlled by the state statutes, although shops can choose to charge lesser amounts. Maximum amounts charged by state can greatly vary. For example, they can range from a low of 2.5% per month on the unpaid balance in California up to 25% of the principal amount in Alabama.

In addition to the interest being charged on your loan, there may be several other fees. Some of these fees include:

• Storage fees
• Service charges
• Insurance
• Lost ticket fees
• Handling fees and more

Always make sure that you ask the pawn shop what will be the total amount of interest and fees that you will incur for each month that your jewelry remains there. Make sure you ask how often interest and fees will be charged and when they are added to your loan. Knowing this may allow you to pick up your pawned items before additional fees are levied and may save you money.

Are You Insured?

If you are only planning to pawn your jewelry for a short period of time, you want to ensure that it will be there when you return. What will happen if the pawn shop gets robbed, or your pieces get accidentally sold? Will you be reimbursed for their total value? Ask the pawnshop what type of insurance they have in case something like this happens.

A reputable shop should offer you a copy of their insurance policy along with the rest of your paperwork. Although this insurance coverage should be adequate, if the unimaginable happens, you may have additional coverage through your homeowners policy.

How Will You Determine The Value Of The Jewelry?

Most pawn shops do not have a jeweler on staff, but they are pretty competent in determining the value of your jewelry. Some of the things that the pawn shop should offer should include:

• A visual inspection of any gemstones included in your piece
• Testing of your metals
• Separation of the different types or karat weight of your metals 
• Value of your metals based on the market price

Once they have done all of this, they should be able to give you an approximate value of the pieces that you have brought in. While this is not a full appraisal, it will give them a base line from which they will create your loan offer.

What Happens If You Are Not Able To Repay Your Loan At The End Of Your Term?

Most pawn shop loans are made for a specific amount of time, but that does not mean these time frames cannot be extended. With most loans you will usually have a couple of different payment options. 

If you cannot pay your loan back in full by the due date, they may be willing to offer you an extension of your original loan. This extension will normally cost you extra interest and fees and may only be for a short period of time. 

Another option you may have is to make a payment on your loan, or to renew your loan. You may have to be able to at least pay the amount of interest and fees that you have incurred on your loan up to that point. Once you pay the interest and fees, the pawn shop may be willing to rewrite your loan as a new transaction and extend you the full terms of your original loan.

These are only a few of the questions you may want to ask. Feel free to ask others that you may have. Most pawn shops will be more than willing to answer your questions about the process. Not only do they want to help you out this time, they want you to feel comfortable enough to come back if you need their services again.