In today’s economic market many people have a hard time meeting payment deadlines, including individuals, families and small businesses. Securing a loan through a bank can be extremely difficult, and the rate of loans approved each year is dwindling quickly. More people today are turning towards asset loans through online pawn shops. An asset loan is a loan given on an item with value, such as an engagement ring, jewelry, watches, diamonds or other valuable items. This loan, provided by the online pawn shop can be in the form of a personal loan, or even a small business loan, and is secured for a set time, at which point the borrower will pay back the money that has been loaned in return for the item they have used as collateral.
When diamonds are put up for collateral to secure a loan there are certain procedures that must be followed, the first of which is having your diamond valued by a professional appraiser in order to determine it’s worth. To begin with, the appraiser will request that the borrower fill out a form indicating their personal details and what they will be using the appraisal for. Once this information has been provided, the appraiser will provide the borrower with a short explanation on how diamonds or colored gems are graded in terms of their worth, giving them a general understanding of what the appraiser will be looking for and how their gem will be valued.
Step 1: Diamond Grading
There are a number of factors that determine what the value of your gem will be. Similar to GIA (Gemological Institute of America) standards, these include clarity, color, carat, shape and others.
Clarity refers to how clear the diamond is. Appraisers will view your diamond under a special high-powered microscope specifically designed for gems to determine if there are any inclusions throughout the diamond. Clarity is judged based on a scale containing six categories and eleven grades, the highest being FL, meaning flawless, and the lowest I3, meaning that there are inclusions which are easily seen that not only have impact on the diamond’s brilliance, but could actually threaten the diamond’s structure.
Color is determined using special diamond grading lamps and gems are assigned a letter grade ranging from D-Z with D being the most valuable.
Carat refers to the stone’s actual weight. The larger the stone the more it is worth. Loose stones are put directly onto a scale and weighed, whereas mounted stones are estimated using a formula that is based on the stone’s cut.
The Shape and Cut of your diamond are also important determining factors, with the shape value based on the market demand. Generally, a round cut is worth the most, followed by princess, radiant and asscher. Often times, larger diamonds can be worth less value than smaller stones if their shape is not in as high of a demand. How the stone is cut will also have a big affect on its worth. Cut is graded based on quality, for example, a perfectly cut stone would command the highest value, followed by near perfect, with a poorly cut stone garnering the least value.
For colored gems, hue and color saturation are also important.
Step 2: Mounting Inspection
After your gem has been fully assessed, stones that are mounted will also be given a metal appraisal, during which the metal used will be assessed in addition to the design of the mounting the gem is set in, as well as the ring’s designer. For example, rings made by name-brand designers, such as Tiffany, will be considered of higher value. Once this assessment is complete, the total value will be added to that of the gemstone.
Step 3: Fair Market Value Assessment
Both the gem and the setting have now been fully inspected to verify their material qualifications. Now the item itself is appraised based on Diamond Market appraisal, which consists of comparing the diamond to the going rate for a similar item currently in the market and checking the gold spot price for market rate in order to define its value.
Step 4: The Final Report
Once all these factors have been determined, the resulting appraisals will be combined to equal a fair market value for your specific item. Once this is established, an offer will be sent to you detailing the estimated total value for your item and how the value was reached. At this point, you have the option to either agree to the appraiser’s valuation, in which case you will be establishing a loan, or you may choose not to go ahead with pawning your item.
When using an online pawn shop to appraise your valuables, all appraisals should be initiated with the purpose of pursuing a loan, however, there are no requirements to follow through if you are unhappy with the appraisal results. It is important to note that the same appraisal process is used for customers interested in selling an item as for customers interested in pawning an item. The offer itself may differ slightly due to the risk involved with loaning against an item, should a customer default on a loan or should the market value for a specific item decrease over the term of the loan.