gold chain jewelry inspected by hand with magnifying glassJewelry has been long known as an investment that can appreciate in value over time. On the other hand, many invest in gold or diamonds as a safe haven during challenging financial times. If you have some jewelry and need cash, you may consider pawning it, but is it a good idea? Continue reading this piece to learn why experts advise against pawning jewelry.

The concept of pawning valuable items has been prevalent for centuries. It started when prominent Roman, Greek, and Chinese businessmen discovered they could profit by lending money to peasants. The idea of short-term loans led to them exploring the possibility of using jewelry to finance wars.

Pawn shops came into existence during America’s Great Depression as they allowed people to get fast money in exchange for their goods. Today, they exist so people can receive quick loans in exchange for pawning items and jewelry made with expensive materials like gold or diamond.

How Jewelry Pawn Shops Work

Pawn shops are small businesses that loan money to people who leave their valuables at the shop until they can pay back the loan and retrieve the items they leave as collateral.

Known as “collateral,” the valuable items serve as security for the cash provided by the pawnbroker. You can get your possessions back once you repay the borrowed money within the agreed time. If you cannot do that, the pawnbroker can sell your valuables. This is all legal. Pawn shops are protected by local, state, and federal laws.

Reasons You Should Avoid Pawning Jewelry

Pawning your jewelry may seem like a good idea in theory, but it can be a risky practice. In the following, we compare the pros and cons of pawning vs selling your jewelry and the top reasons why you should avoid pawning your jewelry.

  • Pawn Shops Loan Small Amounts

Pawn shops typically give away small loans, regardless of how pricey your jewelry is. So if you’re pawning a necklace worth $900, securing the same amount of loan is highly unlikely. Chances are that you’ll only get a fraction of your jewelry item’s market value. This is how they profit. When you default.

According to the National Pawnbrokers Association, $150 is the average loan one can receive from a pawn shop. As such, pawning valuable jewelry for a small amount isn’t wise, especially if you’re unsure whether you can return the money on time.

  • You’ll Need to Pay Interest

Experts recommend against pawning expensive gold and diamond jewelry because the unpromising cost-to-benefit ratio doesn’t make financial sense. To get your jewelry back from the pawn shop, you must return the borrowed money and interest fee before the deadline. Although pawnshop interest fees vary from state to state, they are usually pretty steep in comparison to traditional loans.

Furthermore, the interest fee increases with the time you take to return the borrowed money- that is, if the agreed-upon time has passed. Additionally, the interest fee increases depending on the loan term. The longer it is, the more you have to pay. In many cases, borrowers end up paying more than the value of the pawned jewelry item.

  • You Could Lose Your Jewelry

According to estimates by the National Pawnbrokers Association, only 20% of pawn loans aren’t returned. So, most people eventually get back their jewelry and other belongings. However, taking such a risk with expensive jewelry items isn’t a good idea.

In addition, the pickup rate for pawned items is extremely low in many places around the US. So, many people pawning this jewelry for fast cash end up losing it. While pawning other items may be fine, jewelry isn’t something you’d want to risk unless you have no other way to get a loan. It’s a bad idea if you’re considering pawning family heirlooms for a small amount of money.

  • Some Jewelry Pawn Shops Are Illegal

Pawn shop loan regulation is going strong in many states, but not all pawnbrokers across the country operate legally. Many reports and surveys have found pawn shops operating illegally in the past few years. While pawning valuable jewelry to an illegal pawnbroker is already risky, it is also pretty costly.

Illegal pawn shops tend to charge more than the allowed APR rates. Your pawnbroker may even ask you to sign illegal contracts and scam you with unsuitable loan prices. While pawning jewelry is already risky, pawning an illegal one increases your chances of losing your precious jewelry.

How Much Money Will You Receive by Pawning Your Jewelry?

If you’re considering pawning jewelry, you may wonder how much money you can receive. Unfortunately, pawning your jewelry will give you the lowest amount of money you could get for your valuable items.

The pawn shop business model definitely helps in tough times, but it has more benefits for the pawnbroker than the borrower. Typically, you shouldn’t expect more than 50% of your jewelry item’s market value.

Pick An Alternative — Cash for Gold USA

Chances are that you have limited options if you’re stuck in a bad financial spot. The truth is, you have better alternatives than pawning your jewelry. With Cash for Gold USA, you can avoid settling for a risky action like pawning your jewelry and instead work with our trusted and experienced team. Here are just a few reasons why we are seen as a sensible alternative:


With thousands of customers, Cash for Gold USA is convenient for sellers like you. We have one of the biggest customer networks, with many people trusting and relying on the services. We provide special attention to each customer, guiding them to make the right decision regardless of what they are selling. Additionally, we deal in all kinds of jewelry, including rings, necklaces, bracelets, broken gold jewelry and more. Keep in mind, pawn shops may not be interested in broken gold jewelry that can not be resold.


Cash for Gold USA has GIA-certified appraisers, so we provide accurate assessments and fair payments for your valuable gold, diamond, or silver jewelry. Our assays promise the most value for your possessions after examination and appraisal. As a customer, you can compare our process with other gold and jewelry buyers before making a final decision.

Haggle-Free and Risk-Free

When you feel the need to pawn your valuable and sentimental possessions, eliminating the haggling and stress of pawn shops is often the wisest option. You can rest assured that you’re getting the best price and the most benefit from your valuable gold, silver, and diamond jewelry. The best part about selling your jewelry to Gold for Cash USA is that it’s risk-free. If you’re dissatisfied with our offer, you can get your valuables back — no questions asked.

Bottom Line

Pawn shops are popular throughout the US, giving loans in exchange for valuable items. While the business is pretty common and offers benefits for many people, it can be risky, especially with jewelry. As such, it is not a good idea to pawn your jewelry as you would want to avoid risking your valuable possessions for a small amount of cash. Cash for Gold USA offers a risk-free and convenient way to sell gold and jewelry for a good price.