Pawnshop Loans

Key Takeaways:

  • A pawn shop is a licensed and regulated broker that offers consumer credit (fast loans) secured by personal property.
  • Pawnbrokers don’t give you what the item is worth but rather a fraction of the value.
  • The average pawnshop loan is $150 and lasts 30 days.


Pawn shops have existed for thousands of years with their origins being in Ancient China. They currently thrive by helping Americans with short-term loans.

Yet many people still wonder how do pawn shop loans work?

Short answer: A pawn shop is a licensed and regulated broker that offers consumer credit (fast loans) secured by personal property. Pawn loans are instant and do not improve or impair credit scores.

The main selling point is that pawn shop loans may be obtained quickly without any credit checks, lengthy application processes, or waiting periods.

They give cash on-site based on the collateral you are willing to provide.

In the past, pawn shops have been portrayed as dark, dingy, and dogy places.

Movies and the media pushed the concept of pawn shops as dark, grimy unregulated local stores where shady things would happen. This is not the case.

Rules and Regulations

These days the pawn industry in America has more oversight. There are numerous state and local laws they must adhere to, as well as 15 federal statutes and regulations.

They must supply local law enforcement with transactional data regularly. The transactional information data ensures they are not purchasing or pawning stolen goods.

The National Pawn Association (NPA) helps local owners keep up to date with regulatory requirements and provides other business support.

All NPA members are committed to operating their business in a way that promotes a positive and professional image of the industry.

With over 10,000 establishments across the country, the pawnshop industry is a thriving and welcoming place to do business.

Note: According to NPA statistics, 85% are family-owned independent small businesses.

The industry is legitimate and helps hundreds of thousands of people with jobs and loans.

How Do Pawnshop Loans Work?

If you need a small amount of money in a hurry, you may be able to take one of your possessions with intrinsic value to a nearby pawn shop.

They prefer items that many people value such as jewelry, coins, and firearms.

FACT: Pawn shops are required by law to confirm ownership of goods and will ask to see proof of government-issued ID.

The local pawn shop will lend you money based on your item as the collateral. Of course there is a catch.

Note: Pawnbrokers don’t give you what the item is worth but rather a fraction of the value.

The pawnbroker keeps the item that you “pawned” until you return to pay the pawn loan back. On top of the pawn loan repayment, they will add fees and interest associated with using the service.

Interest usually accumulates over a standard 30-day period.

Rates differ depending on the value of the pawn shop loan. There are also transaction fees associated with the agreement.

FACT: The average pawnbroker loan is $150

If you need a more substantial loan amount, consider an online loan.

Once you have agreed on the loan amount and terms, the pawnbroker gives you a “pawn ticket.” This is basically a receipt and terms of the agreement all in one.

Don’t lose your ticket!

It is crucial not to lose the ticket of your pawned item. To get your collateral back, you will need to produce the ticket.

The ticket will have all the terms of the agreement. It will outline vital information such as when you need to collect your goods, when you need to repay the loan, and the fees associated with the collection.

The standard pawn loan duration is 30 days. Some brokers offer the ability to extend the loan by 30-day increments if the fees and interest are being paid regularly.

Local pawn shops will consider buying your item outright if you do not want to pawn it. You will get more for your goods this way.

But you don’t get them back! Some stores are hesitant to purchase products outright as they make more money from pawning.

If the pawn shop agrees to purchase your goods, then it is a straightforward sale and purchase, and there is no loan agreement involved.

At the end of your loan term and upon payment, you can collect your collateral.

At the end of the term, you are expected to repay the pawn shop loan along with interest and fees. If you are late for collection, you will incur late penalty fees.

If you do not return on the agreed upon collection date, the pawn shop legally owns your goods!

FACT: Over 7% of American households have used a pawnbroker

Pawn shop loans are pretty straightforward. As with anything, there are positives and negatives in using their services for borrowing money.

Pros and Cons of Pawn Shop Loans

Here is quick pros and cons summary to keep in mind when loaning from a pawn shop.


  • You don’t need a good credit score
  • No application process
  • Suitable for short term urgent loans
  • Instant cash for emergencies
  • If you default on the terms, it doesn’t affect your credit score
  • There are no debt collectors


  • If you default on your loan, you lose your goods
  • Pawn shop loans carry substantial fees
  • You’re generally pawning high-value items for low-value loans
  • Standard loan repayment timeline is only 30 days

Alternatives to Pawn Loans

If you want to keep your possessions, consider applying for a loan online. Many loan providers offer quick application processing timelines and will work with you regardless of your credit. offers a free online comparison tool. It’s a fast way to shop for competitive and legitimate loans online. In most cases, online loans offer a better interest rate and lower fees than pawn shops.

If you want to sell your goods, try selling them on eBay, Facebook Marketplace, or Craigslist. You will most likely get more for the item than what a pawn shop is willing to pay.

We hope you’ve enjoyed this read and learned more about the pawnshop industry. Let us know if you have used a pawn shop loan or found an alternative option by leaving us a comment below.

How do pawnshop loans work?

To get a pawnshop loan, you need to put up a valuable item that would be evaluated to determine a resell value after which you are given an offer. If you agree to the terms, you will get a loan offer for a period of time based on the resell value of your item. Although the item still belongs to you, it will serve as collateral over the course of the loan term.

What is a pawnshop loan?

A pawn shop is a licensed and regulated broker that loans money to people in financial distress using personal property as collateral. It offers loans on items that banks would never accept as collateral. For example, pawn shops accept collectibles, jewelry, electronics, and other items that traditional financial institutions wouldn’t consider as collateral.

How much can a pawnshop loan?

Loans offered by pawn shops depend on the resell value of the item offered as collateral. The loan offer is usually in the range of 25% to 50% of the resell value of the item. The average pawn shop loan in the U.S. is $150.

How to get a loan from a pawnshop?

To get a loan from a pawn shop, you need to present a valuable item. That item would be valued to determine a resell value after which you are given a loan offer that’s usually a percentage ranging from 25% to 50% of the resell value of the item.

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AuthorKimberley Smyth

Kimberley is the US Country Manager for She has gained years of experience in small business management and has two successful start-ups under her belt. She now focuses her energy on helping others achieve financial freedom through smart money management and investment opportunities.

Financial information reviewed byRoss Loehr - CFP®, MBA
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Last Updated: December 1, 2022

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