How Do Pawn Shop Loans Work?

To get a pawn loan, go to a pawn shop with something you own that you are willing to give as collateral. The pawnbroker assesses the value of the item, condition and resale value, then decides whether to offer a loan.

According to an estimate pawn shops lend you about 25% to 60% of resale value. It can pay to shop around and compare several pawn shops since quotes can vary substantially. If you accept a loan, you walk away with a pawn ticket and the cash. You will need the ticket to get your item back. You can take a photo of the ticket and save it as backup in case you lose it.

Because you left collateral to the pawnbroker, a pawn loan does not require a credit check, but you must be 18 or above and show your identity proof. Pawn shops are in regular contact with law enforcement authorities to avoid dealing in stolen items, so the shop may require ownership of the item or proof of purchase.

Items you can pawn vary by location and store. High-demand items typically include tools, jewelry, firearms, electronics and musical items. You then return the ticket within the agreed-upon time, usually 30 days to 2 months, to pick up the item and pay off the loan (plus interest and fees). Fees vary by state and can include storage and insurance charges.

If you can’t repay the loan within the agreed term, you may be able to renew or extend the loan. If you can’t repay the loan, the pawn shop sells your merchandise to get its money back. According to National Pawnbrokers Association, the average pawnshop loan is about $150 and is repaid in about 30 days.