What is a pawnbroker bond?
Pawnbroker bonds are legally binding agreements between three parties: pawnshops, the government agency responsible for regulating local pawnbroking activity, and a surety company.
The government agency is the obligee and establishes the obligations that the licensed pawnbroker (the Principal) must follow. The surety (also called bonding company) issues the bond guaranteeing the performance of the pawnbroker.
Why do you need a pawnbroker bond?
Pawnbroker bonds are required in some states as part of the licensing process to operate as a pawnbroker, secondhand dealer, or precious metal dealer. Most pawnbroker licensing is handled at the municipal level while some states handle regulation directly.
When the surety company issues the bond, they provide the government agency a guarantee that the customers and vendors of a licensed pawnshop will receive payment for financial losses resulting from a violation of the statutes and regulations set forth by the pawnbroker license.
If the pawnbroker fails to meet the obligations set out by the government agency, the surety will pay out damages up to the bond amount. The pawnbroker is liable for the losses and is legally required to reimburse the surety company for any damages paid under the bond.
How much does a pawnbroker bond cost?
Pawnbroker surety bond costs vary depending on the total bond amount and the premium rate. The government agency sets the required bond amount and the surety company determines your premium rate, which is the percentage of the total bond amount you pay as the premium.
Premiums for pawnbroker bonds typically cost 1% of the total bond amount. Most pawnbroker bonds require credit checks. During the application process, the surety company also evaluates your financial strength and industry experience. Applicants with good credit generally receive the lowest rates, however, bad credit will not prevent you from securing a pawnbroker bond. EZ Surety still offers competitive rates to individuals with low credit scores or other financial issues.
Below are the lowest premiums EZ Surety has issued for pawnbroker bonds in popular states.
- EZ Surety has issued pawnbroker bonds in the State of Florida for premiums as low as $100.
- EZ Surety has issued pawnbroker bonds in the State of Pennsylvania for premiums as low as $50.
- EZ Surety has issued pawnbroker bonds in the State of Oklahoma for premiums as low as $100.