A pawnshop owner needs to acquire a license involving the posting of a surety bond known as the pawnbroker bond. The pawnshop owner has to complete certain formalities to acquire this license. You may now be wondering about the purpose and the significance of these bonds pawnbrokers Essex. This section will acquaint you with the same, and so follow the section closely.
A pawnbroker bond is there to safeguard the collateral or protect the property of the person who needs a loan. In case a pawnbroker proves a fraud, then the bond will safeguard the property of the borrower. It actually makes up for the losses and compensates the borrower. The process of licensing differs from one state to another for there are different provisions. As a pawnbroker, you should go through the various terms and conditions stated of the bond. Some of the basic terms of the bond should be prohibiting the selling of commodity or pawned item before the due date. A pawnbroker cannot charge a very high rate of interest as well.
What is there in the pawnbroker bond?
It clearly states the amount of coverage the claimant can have in case of a pawnbroker committing a fraudulent act. A bond pawnbroker is also a kind of surety bond stating that the claimant will get the minimum amount of money stated on the bond. If the credit score is good, a pawnbroker pays even less than 1% as a premium of the bond amount. This applies in most cases where the pawnbroker has a good credit score. If the credit score is bad, then the broker needs to pay a higher premium. A lot can change with the proper choice of the agency.
However, if the pawnbroker is bankrupt, he may not acquire the bond.
The way to applying for the bond
The application process is quite straightforward and can be completed online. The online agency will give you the bond quote, and if you agree, then things will move forward. Make sure there is no claim against the pawnbroker bond for that may lead to the withdrawal of the existing business license, or the bond company may refuse to prepare a bond for the applicant.
It is better to avoid troubles in all cases. If there is a claimant moving to the court, try and make the settlement outside the court. Only when your dispute is well documented you should take the risk of moving to the court.