What You Need to Know About Pawn Loans

If you’re in a jam and need cash, you might consider pawning something. But before you bring in that family heirloom or antique to use as collateral, learn more about these loans and the fees involved.

A pawn loan is a secured loan, meaning you’ll need to bring in an item of value (think jewelry, musical instruments, electronics and even some collectibles). The pawnbroker will assess the items and determine their value. On average, a pawnshop will offer you 25% to 60% of the items’ resale value. The terms of the pawn loan are outlined on a pawn ticket that’s given to you when you leave with the money. You have 30 to 60 days to pay back the loan and reclaim your collateral. If you don’t, the pawnshop will sell the item to get its money back.

Getting the Best Deals with Pawn Loans

The good news is, a pawnshop doesn’t report your repayments to consumer credit agencies like a payday lender might. However, the interest rates and fees can be quite high compared to other borrowing options.

Plus, if you don’t pay off the pawnshop loan within the redemption period, you could lose your collateral for good. Depending on your state’s laws, you might be able to extend or renew the loan, but the item will be up for sale again and you’ll likely face additional charges. If you’re in need of extra cash, there are many other borrowing options available to you, including personal loans and unsecured credit cards.