How Pawn Loans Work

March 8, 2018
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If you have ever found yourself in a financial bind or just need some fast cash, obtaining the money you need to pay bills or to cover living expenses can quickly become stressful and at times, overwhelming. Whether you are simply in need of cash quickly or if you do not have a great credit score, consider the option of taking out a loan from a local pawn shop near you.

Pawn Loan Basics

While pawn shops make some of their living by selling items such as gold, electronics, and collectible items, they also offer "pawn loan" services. Pawn loans allow customers to offer collateral in the form of an item that is considered valuable by those running the pawn shop. The item is then kept at the pawn shop while the customer is provided cash along with a pawn loan ticket and the due date for the total amount owed on the loan.

When taking out a pawn loan it is important to keep in mind that you are also responsible for any interest that incurs throughout the duration of your loan. Before agreeing to a pawn loan, be sure to inquire about the terms and conditions along with payment deadlines, extension opportunities, and renewals (if available).

Talk with the pawn shop employee you are working with to learn more about items they are searching for and what is most in-demand throughout their shop individually. The more familiar you are with your local pawn shop of choice, the easier it is to obtain the money you need when you are using collateral in exchange for a loan.


Extensions on pawn loans are often available but vary with each pawn shop. If you are unable to pay a loan back in a timely manner, you may have the option of renewing your loan completely after paying any interest owed on the original loan first. Once the original interest is paid in full, a new extension may be granted without the risk of losing your collateral in default.

Pawn Loan Renewals

While not all pawn shops offer renewals, some do. Pawn loan renewals are possible if you have paid off what you originally owed on your collateral, but are seeking additional cash to cover finances a second time. In many cases, pawn shops will agree to keep your item and renew your loan under the same terms and conditions while also providing you with cash in hand immediately.

How Appraisals Work

Any time you take an item to use as collateral to a pawn shop you are likely to receive a wide range of estimates and appraisals. Some pawn shops focus solely on gold and jewelry, allowing them to maximize profits and may offer less money for other items such as electronics or music equipment. Pawn shop owners research blue book and retail value of items before providing you with an appraisal which is most likely much less than the original cost of the item. Consider the type of items the pawn shop you are interested in using to obtain a pawn loan carries.

How to Get a Quote

Although it is possible to get a general quote for the items you want to use for collateral online or over the phone, shop owners will want to inspect items in-person to ensure they are in working condition (especially for electronics) and that they are legitimate and authentic. Once your collateral has been inspected and researched you are likely to receive an appraisal based on its surrounding industry and market demand.

What to Pawn?

Deciding on what to pawn when you are in need of cash quick is extremely overwhelming, especially if you are unsure of where to begin. Most pawn shops welcome everything from gold and silver jewelry to guns, collectibles, and working electronics. If you are thinking of pawning jewelry you own, verify its value and the type of gold or silver you have by visiting a local jewelry shop prior to taking out a pawn shop loan. Keep in mind, however, that pawn shops are in business to make money and minimize their risk, so the cash you are able to get may be less than what the item is actually worth.

What Shouldn't You Pawn?

When you are searching for a pawn shop loan but you do not have much time, avoid using out-dated or junky items as collateral. Not all pawn shops are willing to provide loans for just any item brought into the store, which is why it is essential to conduct a bit of research on various items you have available to use for collateral before making your decision. We would also advise you to not pawn items with lots of sentimental value if possible.

Using a pawn shop loan is ideal when you are in a time crunch and in need of cash fast. With the right collateral and the ability to pay back your loan in a timely manner, taking advantage of pawnshop loans allows you to remain above water financially anytime you are in need without credit checks or other hassles.

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