How Does The Pawn Process Work

Put simply—customers pledge property as collateral, and in return, pawnbrokers lend them money. When customers pay back the loan, their merchandise is returned to them. Pawn loans are made on everything from jewelry to electronics. If the customer elects not to redeem his or her collateral, there is no credit consequence to the borrower and the items are sold at a value price to retail consumers.

Why Would Someone Go To Us To Get A Loan?

Pawnbrokers offer the consumer a quick, convenient and confidential way to borrow money. A short-term cash need can be met with no credit check or legal consequences if the loan is not repaid. Pawnbroking imposes a discipline on the borrower that other lenders do not. Pawn loans do not cause people to overextend credit or go into bankruptcy. 

How Does Pawn Work?

A pawn is another term for a collateral loan.  Pawnbrokers lend money on items of value ranging from gold and diamond jewelry, musical instruments, televisions, electronics, tools, household items, firearms, and more.  Some pawn shops may specialize in certain items.  Loans are based on the value of the collateral.  When a customer pays back the loan, their merchandise is returned to them.  A customer may also choose to surrender his or her collateral as payment in full.  Pawn shops may offer extensions/renewals (where permitted by state law).  

What's The Deal

Pawn stores offer collateral loans for surprisingly low interest rates. They specialize in short-term small loans.

Pawn stores can offer this type of deal because the customer offers personally owned property as collateral, which significantly reduces the risk for the lender. When the customer pays the loan back, the property is returned. In the U.S., over 80% of all collateral property is re-claimed.

Pawnbrokers also lend larger amounts of money for more flexible periods of time at lower cost. If you take a secured short-term loan from a pawnbroker, you will only pay interest on the actual period for which you use the loan.  

Secured short-term loans from pawnbrokers are highly regulated,  and all the terms of business are clearly stated in a government-regulated contract.

So, if you are looking for a secured short-term loan and don't qualify for a loan from your bank or credit union, check out what the Pawn industry has to offer!

Pawn Regulations Good For Clients

Pawnbrokers are governed by all of the major federal laws that apply to other entities designated as financial institutions, including:
• USA Patriot Act
• Truth-in-Lending Act
• Bank Secrecy Act and IRS regulations requiring reporting of certain cash transactions
• Trading with the Enemy Act and related Executive Orders and regulations
• Privacy provisions of the Gramm-Leach-Bliley Financial Services Modernization Act