Pawn Shop Bond
A pawn shop surety bond, also known as a pawnbroker bond, is a specific type of commercial surety bond. In some states, you must obtain one of these surety bonds before your business can operate legally.
What is a Pawn Shop Bond?
Pawnbrokers must abide by state laws and codes of conduct. For example, they can't charge exorbitant amounts of interest or fail to honor sell-back terms. Pawn shop bonds hold a business owner financially accountable when they violate state laws and cause damages to the public. States require these bonds as a way to regulate the pawn shop industry, enforce state laws, and provide a mechanism for people to seek compensation.
How does a Pawn Shop Surety Bond work?
Anyone who believes a pawn shop has stepped outside the bounds of the law can file a claim against the bond for damages. The company that backs the surety bond will investigate if a pawn shop did in fact break the law. If so, the company pays to settle the claim in full. However, the surety bond company does not accept the end financial responsibility. That rests solely on the bonded party - the pawn shop owner. In this way, bonds help prevent pawn shop owners from evading their financial obligations.
Who should get a Pawn Shop Bond?
Some but not all states require pawn shop owners to prove they have this type of surety bond before they can begin operating. If you're unsure whether the bond requirement applies to your state or business, contact Viking Bond Service. We can help you find the right answer, and make the rest of the bonding process just as easy.
Who are the parties involved in a Pawn Shop Bond?
The pawn shop owner is one of three parties involved:
- The principal is the pawn shop owner. This person must obtain a bond, keep it active, and pay for claims filed against it.
- The obligee is the person who could be harmed by the pawn shop owner's illegal actions. This person may file a claim for damages, which is guaranteed to be paid as long as it's true.
- The surety is the company that issues and backs the bond. The surety is the one that pays claims, but the principal must always pay that debt back with interest and fees.
How much does a Pawn Shop Bond cost?
Each state has different requirements for how large the bond must be. The size of the bond designates the maximum amount the surety company agrees to pay out to settle claims. The cost of the bond (called the premium) is a small percentage of the total amount, usually around 1% - 3%. How much an individual business owner pays depends on his or her credit, business background, and financial history. People with bad credit should expect to pay more, but not significantly more. Rely on Viking Bond Service to make bonding easy and affordable regardless of your credit score.
How are claims handled for Pawn Shop Surety Bonds?
Surety companies take each claim seriously, and while they guarantee payment for all valid claims, they never render payment automatically. First, the surety must prove that the details of the claim are true. Sometimes they're not. Provided that everything checks out, the surety pays the obligee the full amount of the claim. To complete the claims process, the principal (the pawn shop owner) must pay the surety back the amount of the claim, accrued interest, and fees to cover the investigation costs.
How to apply for a Pawn Shop Bond?
It's easier than you think. Simply fill out a standard application for a commercial bond. It will ask for information about your finances, business plan, and background, and for similar information from any of your business partners. Depending on the application, underwriters at the surety may request additional documentation. At Viking Bond Service, expect to receive a quote within 24 hours. Then just pay the premium, and you're fully bonded.
Viking Bond Service - Bonding Pawn Shops Nationwide
It doesn't matter what state you're in, how large a bond you need, or what your credit looks like - Viking Bond Service has what you need. To get a bond fast, complete our online bond application at your own convenience. To get more information, call us at 1-888-278-7389 or use the contact form on this page.
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