Selling vs. Pawning: The Benefits and Drawbacks

If you find yourself in financial trouble with nowhere to go and no immediate friend or family to ask for help you should consider the next step – either sell or pawn your valuables for cash. There are up and down sides to both approaches but it comes down to how you feel about your valuables and how urgent your need for cash is. 

Let’s break down the two choices so you know enough to make an informed decision: 

How is selling different from pawning?

When you take anything to Melbourne pawnbrokers you are putting it up as collateral for a loan. Pawnbrokers evaluate the item and based on their evaluation, they will make you an offer. It’s not a case of walking into a pawnshop and saying “I need $500 for this jewellery”. If the jewellery is not worth $500, there is no way a pawnbroker will give you that much for something worth less. Once the evaluation is made and the offer made, you can either accept or decline. When you accept the offer, you are essentially agreeing to pay the loan plus interest within a specific time. The pawnshop broker will store your valuables safely until the loan becomes due. If you manage to pay the loan back with interest on time, you will get your items back. However, if you fail to meet the contractual obligation and not pay the loan in full, the broker now takes ownership of the items and can sell them.

There are different methods of selling valuable items, you could get more cash on some whilst others are more complicated and require more work on your part.

So, should you sell or should you pawn?

Benefits of pawning

Technically you still own the items so long as you honour your contractual obligations and repayment rules. This means if you are not ready to part with something, you don’t have to, it is yours and can be passed on as you wish as long as you pay the loan back. You can pawn the item again if you ever find yourself short of cash. 

Your credit history is unaffected

Whether you have good or bad credit history, it won’t matter when you pawn your valuables to . When to fail to pay off your loan. This will not have any effect on you score one way or the other. A pawn loan is a little like a obtaining a secured loan, however no one will check your credit history. You won’t be asked to produce your bank statement either but in the interest of avoiding fraud, a broker might ask you for your ID maybe your rates and Texas bill to verify that you are who you are and to verify your residential address.

Melbourne pawnbrokers will give you cash on the spot. It might take a few minutes for you to get through the paperwork but you will walk out with cash in hand. 


Failure to pay the loan back will result in you losing the item. The pawn shop will have to place your item up for sale. Agreement between pawnbrokers and clients aren’t sealed with a hand shake. There should be a written contract with the stipulation about the consequences of defaulting on your own agreement. 

The broker will have to sell your valuable if you fail to meet the terms of your loans. You will know exactly when your entire loan is due. Pawn loans are short, so if you know that you will not be able to repay your loam then the best thing you can do is to just sell the item then the pressure of having to pay back a loan goes away. 

Your items can be valuable to you but a pawnbroker may not accept it. The reasons is that a pawnbroker has to choose items that are of good quality and false be in demand. He needs to be sure that he can sell the item easy should you fail to repay your loan. Pawnbrokers have to make a profit but if they belong to a network.

Your item may not be accepted as collateral for a loan.

A pawnshop broker may turn down certain items because their value may be low or they may not be easy to sell. If your valuables are unusual or if you have not been successful in selling them elsewhere, a national broker with a chain of store may be your best bet. He or she might find a shop in the network of stores that may be able to sell your item. 

Benefits of selling 

You may make more money if you sell instead pawning. The amount you will get will depend on whether there is a market for it. For instance, there could be more money to be made by selling your valuables on an auction site. You could also advertise your items in the community newspaper or elsewhere.  

The best thing about selling is that it won’t cost you anything to get your things back. Once you’ve sold your item, the money is yours to use as you please. Selling is a great way to make money from something you may no longer need. Declutter your life. Instead of hoarding a bunch of stuff you hardly ever use or never used you could just sell it and make money to spend on something you really nee 


The same thing that may be counted as an advantage could turn out to be a disadvantage – that the item will not belong go you after the cash is paid to you. This is why you have to be certain that you will not need the item anymore because there is no turning back once the sale has been made. 

Selling may take a while and require more work and you could end up not getting the amount you were hoping for.

When selling on online classifieds like Gumtree, you might have to factor in extra charges. Online adverts are good when you want to reach a wider audience but that means incurring seller fees. You also have to take care of your shipping and insurance, these extra fees end up reducing what you should be getting.

Which ever way you want to have the value unlocked it is important to understand the process and to be prepared for the outcome of each action.