Pawn shop financing are businesses that buy and sell second-hand items such as jewelry, firearms and musical instruments. They also offer personal loans using customer merchandise as collateral. The loan amount offered is typically based on the item’s appraised resale value, and pawnshops charge interest rates that vary by state law. In most cases, customers have 30 days to repay their loans plus fees or lose the item that they pledged as collateral.

To make a pawn shop loan, a person must bring an item of value into the store and complete a short over-the-counter evaluation process. Most pawnshops will only accept an item that they could resell, such as a valuable piece of jewelry or a firearm. The pawnbroker will then evaluate the item and offer a loan amount based on its resale value, which is usually lower than its original purchase price.

Fast Pawn Loans: Understanding How They Work

The process is quick and easy, and a pawnshop loan does not require a credit check or impact a borrower’s credit score. The pawnshop then keeps the collateral until a customer returns to pay their outstanding loan balance and fees. If the item is not reclaimed within the loan term, the pawnshop then attempts to sell it for cash.

While pawnshop loans are an option for people who need fast cash and have no other options, they come with several downsides including high interest rates, short repayment terms and the risk of losing important personal belongings. If you’re in need of a cash advance, consider an alternative such as an online personal loan or a secured bank loan.