The practice of lending money with collateral as a placeholder is as old as time itself. From Ancient Greeks to Roman emperors, the rich lent money to peasants for their possessions when the peasants needed to pay off debts.

In fact, the term “pawn” is derived from the Latin word “platinum,” meaning clothing. In the days of ancient Rome as well as fifth-century China, clothing was considered the most valuable possession, making it a natural contender for collateral.

Aspects of pawning were even written into Mosaic law. Jews couldn’t charge other Jews interest for money borrowed, and Christians could not charge interest to other Christians for loans, either. If someone lent money to a person outside their faith, they could charge interest in addition to collateral.

The Modern-day Pawn Shop

Pawn shops existed under law in European and Asian countries since the fifth century. Today in the United States, It’s not uncommon for small cities to have at least one pawn shop.

The most common possessions pawned today are engagement and wedding rings. This category of collateral is followed closely by music instruments and family heirlooms.

Common Pawning Schemes

Though many pawn shop owners are honest, they cannot stay in business if they don’t make a profit. That’s why pawn brokers tend to offer less money for an item than its value. this way, if the owner of the collateral doesn’t return to buy it back, the pawn broker can sell it for a profit.

Schemes involving pawn shops don’t always lie with the brokers, though. When common criminals need to make some quick cash, they steel potentially valuable items from unsuspecting victims, and then they bring them to a pawn shop as collateral. This type of theft is hard to prove unless the stolen item is one of a kind.