Pawnbroker Bond
What is a pawnbroker bond?
Various states and municipalities require pawnbrokers to obtain surety bonds as part of the licensing process to ensure ethical and lawful business practices. The bond’s primary purpose is to protect the property that customers may post as collateral in exchange for a loan. It may also protect against fraud, misrepresentation, and financial crisis (on behalf of the pawnshop).
You may need more than one surety bond if your state and local governing authorities both require bonds.
This surety bond may also go by “pawnshop license bond” and “secondhand dealer bond.”
Who needs a pawnbroker bond?
Check with your state and local government to determine if you need this surety bond to operate your pawnshop business. If you have multiple business locations, you may need more than one bond. Roughly half of the United States have surety bond requirements for pawnbrokers.
Get Your Pawnbroker Bond:
Quick Takeaways
- Various states and municipalities require pawnbrokers to obtain surety bonds as part of the licensing process, ensuring legal and ethical business practices.
- You may need more than one surety bond if your state and local governing authorities both require bonds.
- If a customer’s property (collateral) is damaged or stolen or a pawnbroker breaks the law, the injured party may file a claim against the bond to receive compensation.
How do pawnbroker bonds work?
If a customer’s property (used as collateral) is damaged or stolen or the pawnbroker breaks the law, the injured party may file a claim against the bond to receive compensation.
If the claim is valid, your surety may step in to cover the costs of the claim if you can’t pay or refuse to pay. The surety may pay the claimant up to the full bond amount. You must then repay the surety in full for all costs incurred, including legal fees and other applicable expenses.
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To avoid a claim against your surety bond, ensure you understand the specific laws and regulations governing your industry. There may be special provisions for your state or city. If you face a claim situation, it’s best to settle the dispute quickly and avoid going to court.
If you’re not responsible for the claim or someone files a false claim, you can fight the claim in court. Be sure to keep accurate documentation so you have evidence to present. Your surety may also assist you legally.
How much do pawnbroker bonds cost?
You will pay a small percentage of the total bond amount required for your location. The full bond amount is the maximum amount of coverage for claimants. You might pay as low as 1% of the bond amount if you have a good credit score. So if you need a $10,000 bond, you could pay as little as $100 for your premium.
If you have poor credit, you may pay a higher percentage. However, keep in mind that these are low-risk surety bonds. So getting bonded should be a simple process.
Get a Pawnbroker Bond in Your State
ZipBonds is the fastest and most secure way to get the license and permit bond you need. We take out the pain of long, complicated applications. Most of our bonds are approved and processed immediately. Get your pawnbroker bond by applying below – or call us directly, and we’d be glad to walk you through the process.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.