There’s more to pawn shops than meets the eye — unless you’re a fan of the reality TV series “Pawn Stars.” They’re places where people bring in personal property, such as jewelry, electronics and photography equipment, musical instruments and firearms, that pawnbrokers then sell for cash. Most pawn shops also offer loans, which a consumer can take out for a short amount of time and at a very high interest rate. At the end of the loan period, if you haven’t paid the pawnbroker back all that you borrowed, they have the right to sell the item and keep the profit.

There are local pawn shops basic reasons to go into a pawn shop: to buy something, to sell something or to pawn an item. Not all of those options make good financial sense for consumers.

Affordable Pawn Shop: Great Deals and Fair Prices for Every Customer

The biggest drawback is the high interest rates. For instance, a pawn shop loan can end up costing you more than double what you originally paid for the item. That’s because a pawnbroker is required to agree to a price for an item before selling it to the customer. That price is usually considerably below the actual market value of the good.

Another drawback of pawning is the fact that your personal items become the property of the pawnshop after you leave them there. That’s why it’s important to understand how a pawnshop works before you decide to take out a loan or purchase something there. The more you know about the process, the better your decision will be.