Whether you’ve cancelled your wedding, ended your marriage, ran into financial issues, or want to upgrade your existing diamond ring, you may need to sell your ring. One option we see many people do is sell their diamond ring at pawn shops. In this comprehensive guide, we’ll uncover exactly how to sell a diamond ring to a pawn shop, and if it’s even worth it in the first place!
Bottom Line Recommendation
You should never sell your diamond ring to a pawn shop.
You will always get a fraction of the value of the ring. And if you choose to get a loan with the diamond ring as collateral instead, you can expect interest rates of upwards of 200% APR.
Many pawn shops take advantage of desperate customers to lowball them and squeeze every dollar out of them.
Instead, consider selling your ring to places like Abe Mor, your local jewelry store, or another company that specializes in buying back diamond rings.
You may not get much back, but you’ll definitely get more than what a pawn shop would’ve given you.
|Table of Contents|
|• How Do Pawn Shops Work?|
• Is Selling a Diamond Ring to a Pawn Shop Worth It?
• Alternatives to Selling Your Diamond Ring to a Pawn Shop
• Here’s What To Do If You Still Choose to Sell Your Diamond Ring To a Pawn Shop
• Final Thoughts
How Do Pawn Shops Work?
The pawn shop business model has existed for hundreds of years.
The model is quite simple. You walk into a pawn shop and give the pawnbroker something of value you own.
In this case, that item is a diamond ring.
In return, the pawnbroker gives you a loan.
The loan amount will almost always be less money than the market value of the diamond ring. For example, if your diamond ring’s market price is $10,000, then your loan could be anywhere from approximately $3,000 to $8,000.
The diamond ring will then act as collateral. In other words, if you’re unable to pay back the loan amount, the pawn brokers keep the diamond ring.
What does the pawn shop do with your ring then? They sell the diamond ring to recoup their losses with some additional profits to pay for their overheads like rent, building maintenance, and employee wages.
Most loan terms from pawn shops tend to be very short, with repayment ranging from one to six months on average.
On the other hand, you can sell or exchange your diamond rings to the pawn shop.
In this case, the pawn shop pays you a one time flat fee for the diamond ring.
The only issue? Pawn shops are notorious for only paying out a small fraction of what the diamond rings are actually worth (ie. the fair price).
This is again due to the fact that the pawn shop owners look to make profits and to pay for overhead expenses.
And this is why we don’t recommend going to a pawn shop to sell your diamond engagement ring or any other unwanted precious metals.
Is Selling a Diamond Ring to a Pawn Shop Worth It?
No, selling your diamond ring to a pawn shop is not worth it.
If you’re going to a pawn shop for a loan, you can expect some ridiculous interest rates — we’re talking about 200% APR!
Even if you’re looking to sell your diamond jewelry, you’ll almost always end up with a small fraction of what the diamond jewelry is actually worth in return.
But why do pawn shops do this? Here’s why…
When you walk into a pawn shop looking to buy something, you’re more than likely hoping to pay less than you normally would at a regular store.
So if you come across a sweet pair of headphones that normally retail for $200, you would hope that the pawn shop sells it for $150 or less.
Well in order for the pawn shop to be able to sell you that pair of headphones for $150 and still make money, they would have had to buy that pair of headphones off someone for far less.
Remember, pawn shops need to account of expenses and have to make a profit as well.
Another reason why selling your diamond ring to a pawn shop is not worth it is because the pawn shop staff are not diamond experts.
We’d bet many employees at a pawn shop wouldn’t be able to tell the difference between an E and F colored diamond.
And if they aren’t able to recognize specific features of your diamond, they would not be able to accurately appraise its value.
Alternatives to Selling Your Diamond Ring to a Pawn Shop
The unfortunate reality of the diamond industry is that you may always lose money when you’re selling diamond rings.
Many diamond retailers will sell engagement rings with some hefty markups (some can even go as high as 50-100%).
So even if your diamond magically increased in value by 10-20%, the market price for your diamond is still far less than what you’ve paid for it.
Many luxury jewelry stores are notorious for this. That’s why we recommend retailers like James Allen and Blue Nile to offer customers diamond jewelry and rings at a fair price without the heavy markups.
Despite always losing money when you sell your diamond ring, some alternatives will help you lose less money than others.
One of those alternatives is to sell your diamond jewelry to Abe Mor. While you definitely won’t get back the same price you paid for your diamond ring, you’ll get much more money than what you would’ve received at a pawn shop.
The second alternative is to sell your diamond ring to a local jewelry store. The reason for this is because at least a diamond expert at a local jewelry store will be better able to appraise your diamond ring better than a pawn shop employee would.
And the third alternative is to sell your ring to a company that focuses specifically on buying back diamond jewelry. These companies typically go the extra mile to have your diamond inspected in a lab by GIA standards.
This would give you a better idea of what your diamond ring is actually worth and you may be able to receive a better price for your diamond ring.
Here’s What To Do If You Still Choose to Sell Your Diamond Ring To a Pawn Shop
If you decide to still go down the route of selling your diamond ring to a pawn shop, here a few things to keep in mind:
Consider the full cost of the loan amount. Factor in what you have to pay in interest for the duration of the loan and any extra hidden fees
Check the reviews of the pawn shop on Google to make sure other customers didn’t have a bad experience
Visit your local jewelry stores to compare quotes on your diamond ring. You may not get much from a jewelry store but you might get more than a pawn shop
Always negotiate and bargain with the pawn shop employees. They’re usually used to it anyways and you can probably get a better price on your jewelry
Read the contract thoroughly. Consider bringing a friend along to double check with you. There may be some unfavorable terms in the contract that can harm you as a buyer down the road
Be ready to walk away if the deal isn’t suitable for you. Many pawn shops take advantage of people that don’t know any better or urgently need cash. And if you feel like you’re being taken advantage of, you can walk away (there’s plenty of other pawn shops out there)
Pawn shops are known to lowball any customer that walks in their door.
If you need a loan, be prepared to pay upwards of 200% APR.
And if you’re looking to do a one-time sale, be prepared to be offered a fraction of what your ring is worth.
So if you have a diamond ring to sell, we would strongly recommend you reconsider and instead go for some alternatives like selling it to Abe Mor.
Or consider selling your diamond ring to a local jewelry store or a company that specializes in buying back diamond rings.
At least this way, you’ll get a better appraisal for your ring.
And as a reminder, you’re most definitely not going to get more money than what you’ve paid for on your diamond ring.
Because when you buy a diamond ring in the first place, many popular luxury diamond retailers will sell an engagement ring with a hefty markup.