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Whether you’ve canceled your engagement, ended your marriage, run into a difficult financial period or simply want to upgrade from your existing engagement ring to a new, bigger or more beautiful one, there may come a time at which you need to sell your diamond ring.
Enter the pawn shop. Thanks to flashy, highly visible signage and advertisements everywhere from local papers to Google’s search results, pawn shops are often the first place many people turn when they need to sell their old, used diamond rings.
While a pawn shop might be a good place to shop for a used TV, musical instrument or set of power tools or other items, it’s not a good idea to sell your diamond ring or any other high-end jewelry here.
Because of the pawn shop business model, you not only won’t get back anything close to the price you or your fiancé originally paid for your ring — you probably won’t even receive its fair market value.
We’ve explained this in more detail below, as well as several better alternatives to selling your diamond ring or other precious jewelry to a pawn shop.
Pawn shops, or pawnbrokers, have been around for thousands of years, with a business model that dates back all the way to Ancient Greece.
The pawn shop business model is fairly simple. You, or someone else, walk into the pawn shop and give the pawnbroker something you own. The pawnbroker then gives you a loan, using the item you’ve provided as collateral for this loan.
This process is called pawning the item. After you pay back the loan and any interest that the pawn shop charges, the pawnbroker gives back the item you’ve provided as collateral and the process is finished.
In the event that you don’t repay the loan, the pawnbroker keeps the item you pawned and sells it to recoup their loss.
Most of the time, any loan that you’ll receive from a pawn shop will be for significantly less than the item you’re pawning is worth. For example, if you pawn a watch with a used value of $1,000, the pawnbroker might offer you a loan of $250 to 600.
Pawn shop loans tend to be short term, with most made out with a repayment deadline of one to six months.
Alternatively, you can also choose to sell an item to a pawn shop. In this case, the pawnbroker will pay you a flat fee for the item you’re selling. Usually, this fee is a small fraction of the item’s value, as the pawnbroker needs to be able to make a profit when selling the item.
No. Selling a diamond ring to a pawn shop is never a good idea. When you sell a diamond ring or any other diamond jewelry to a pawn shop, you can expect to receive a small fraction of what the diamond and setting is actually worth as payment.
Here’s why. People shop at pawn shops to get a good deal on pre-owned items. No one walks into a pawn shop expecting to pay the market price for something. Pawn shops almost always attract customers because their prices are well below the market average.
This means that pawnbrokers either need to keep their costs very low, or make money through the loans they give out.
Take a pawn shop loan for example. Once fees and interest are calculated, a typical pawn shop loan can easily run to more than 200% APR. This means that a pawn shop gets a high return on investment simply by loaning out money using people’s items as collateral.
In order to get a similar return on investment by selling a used item outright, a pawn shop needs to buy it at a very low price. Not only do they need to make a profit on the sale — they also need to pay their rent, employee salaries, utility bills and other expenses.
There are also other factors that make a pawn shop a bad place to sell a diamond ring. The first is that most pawn shop owners aren’t diamond experts. As such, if you have a particularly large, clear or colorless diamond, they may not be able to recognize and accurately appraise its value.
The second is that a pawn shop’s primary resale market is local. They might try to sell your ring locally, or pass it on to a local jewelry store. This is a smaller market than online, necessitating a lower selling price (which means, in turn, that they can afford to pay less for your ring).
Finally, there’s the negotiation factor. Pawn shop owners and employees are experts at finding small, imperceptible flaws in products that allow them to offer you a lower price. If you’re not an experienced negotiator, it’s easy to get taken for a ride and only end up with a small fraction of what your diamond ring is actually worth.
Because of these factors, the average consumer only gets about 30 to 60% of what their item is worth when they sell to a pawn shop.
As we explained in our guide to selling diamonds, unless you have an exceptionally rare stone (a situation we have never encountered), you will always lose money when you sell a diamond ring.
This is just a simple reality of the jewelry industry. Let’s say you bought a loose diamond from a jewelry store for $5.000. Assuming the jewelry store sold it with a 25% markup (theoretical only — most jewelry stores have a higher markup than this), this means it cost the store $4,000.
Even if diamond prices have risen 10% since you bought the diamond, the market price for your diamond is still lower than what you paid.
Now, there’s also the fact that no store is going to buy a pre-owned diamond ring at the market price when they could purchase a new diamond and setting from a supplier either at the same price, or on consignment at no immediate cost.
The end result of this is that regardless of how and where you sell your diamond ring, you won’t receive its market value and will always lose at least some amount of money compared to what you or your fiancé originally paid.
However, there are a variety of options for selling a diamond ring, some of which will cause you to lose less than others.
The first of these is selling the diamond privately on eBay, Craigslist or another platform. This is probably going to recoup you the largest percentage of the diamond’s original price. However, it can be a slow process and finding buyers for a used engagement ring isn’t always easy.
The second is to sell it to a local jewelry store. Since jewelry stores already have suppliers that can sell them diamonds directly at very good prices, they’re unable to offer you very much. For the most part, you’ll be offered an amount well below the market price for your diamond.
The third option is to sell your diamond ring to a company that specializes in buying pre-owned diamonds. These companies will have the diamond inspected by a lab like the GIA, then offer a price based on its quality and value.
We compared several of these companies in our guide to selling a diamond and found that Abe Mor offered by far the best prices. While you won’t get back what you paid for your ring, you will get much more than you’d receive from a pawn shop.
If you’re dealing with a serious financial emergency and need to sell your diamond ring as soon as possible, a pawn shop might be the only viable option.
In this case, it’s important to go into the pawn shop with a full understanding of how the process works, as well as the most common hazards that can affect you as a buyer:
As we covered above, selling to a pawn shop is rarely a good idea when there are many better alternatives available. However, if you absolutely must sell at a pawn shop, the above tips may help you get a slightly better price for your diamond ring.
Pawn shops will rarely offer you a fair price for your diamond ring, with most only paying a small fraction of what your jewelry is actually worth. As such, we don’t recommend selling a diamond ring or any other precious jewelry to a pawn shop.
Instead, you’ll almost always get the best price by selling to Abe Mor. While they won’t pay you in minutes like a pawn shop will, you’ll be paid a much better price for your diamond within a couple of days of receiving their final offer.
Alternatively, you can use the contact form at the bottom of our guide to selling diamonds to get in touch with our team. We’ll then pass the details of your item on to our contact in the diamond district and send you more information.
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