the process of pawning and how it benefits both people
In: Economics
Pawning an item, is essentially putting up collateral for a short term loan.
think about it this way. I want to borrow $50 from my friend. He says, OK, but I need to trust you’ll pay me back and thats hard, I don’t know if you will. How about you give me your Xbox, I’ll hold it, and when you can pay me back the $50 you borrowed (plus a fee/interest), and I’ll give you back the Xbox.
Essentially thats what a pawn is. You take out a loan, with collateral of some item.
Pawn shops also buy items directly from people, but despite what the TV pawn shows show you, nearly all of their business is in pawning items, not buying/selling.
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