Second hand or pawn shop - what's the difference?

Ruapehu Bulletin, Volume 14, Issue 666, 10 December 1996, Page 16

Second hand or pawn shop - what's the difference?

By

Jeanette

Harris,

mlnistry of consumer Affairs Over the past few years we have seen the growth of pawn shops. Many consumers are unfamiliar with their rights and responsibilities when dealing with these businesses, and can confuse them with second-hand goods dealers. A pawn shop lends money on goods which it holds as security. The consumer can then redeem the goods later after the payment of the principal and interest. The second-hand dealer purchases goods for reselling. Pawn shops operate under the Pawnbrokers Act. The pawnbroker must be licensed and must obey specific regulations. ,

The goods accepted by the pawnbroker are called pledges. The pawnbroker must record all pledges, together with the name and address of the owner, the amount of money advanced and the rate of interest charged. A ticket containing this information must be given to the person making the pledge. The person making the pledge then has three months in which to redeem the articles, if they are clothing, or six months for other articles. After this period, the articles are said to be forfeited, and can be sold.

The law says that forfeited pledges must besold at auction. Notice of the auction must be put in a newspaper at least twice before the sale. The consumer has 12 months in which to claim any money left over from the sale of the goods, after the amount owing to the pawnbroker has been deducted. The Ministry of Consumer Affairs suggest that consumers check carefully when selling goods to a shop to clearly ascertain whether they are dealing with a sec-ond-hand goods trader or a pawnbroker.