How Do Pawn Shops Work?

How Do Pawn Shops Work?

The pawnbroking business began over 3,000 years ago, and while at certain stages of its existence it may have been considered as a shady enterprise, this has certainly not been the case for many years now.

It is now seen as a thriving and respectable industry which serves all members of the community and offers a “no fuss”, efficient and quick way for a person from any walk of life to obtain a short-term loan.

How do pawn shops work?

The way in which a pawn shop operates could not be more straightforward and offers clear advantages for all concerned.

In essence, the modern-day pawnshops prefer to accept things such as jewellry, watches or high value electronic goods, but some will accept any item they assess to be worthy of a loan.

Borrowing from yourself!

To avail of pawnbroking services you simply visit the brokers store with the item you wish to secure a loan against and proof of your identity. This proof should clearly state your name and home address and be dated within the last 3 months. It can be in several forms such as:

  • Utility bills
  • Tenancy agreement
  • Official letter from local authority
  • Bank statement
  • Driving licence – While not dated within 3 months this clearly states your name and home address and is accepted by many brokers.


The valuation expert at the pawnbroking store will evaluate your item and give you a figure in relation to how much money you can borrow against it. If you agree to the figure quoted and the interest rate that will be charged for the duration of the loan this is known as “Pledging your own property”.

Multiple items:

You are at liberty to take more than one item to pawn. Each item will be subject to an individual evaluation. It is acceptable to redeem items individually or with your other pledge items. This is subject to the appropriate interest and loan amounts being settled in full.

Completion of transaction:

Upon agreement of the amount to be loaned and interest rate charged you will be given a contract to sign that clearly states your personal details, the item(s) you are pledging and the amount borrowed as well as the interest rate to be levied for the period of the loan.

This is known as your “Pledge Receipt” and it is very important you keep this document safe to ensure redemption of your item(s).

Duration of pawnbroking loan:

This is 6-months from signature of the pledge receipt and if you pay all outstanding charges you can redeem your item(s) at any time during this period.

How do pawn shops work if you cannot repay the loan as agreed?

If you cannot pay the total loan amount and the total interest amount back at the end of the 6-month period most pawnbrokers will agree to an extension of the loan as long as you settle all outstanding interest charges in full.

By doing this they will then issue a new pledge receipt for a further 6-month period on the same basis as the original agreement.


Only a small number of customers default on their loans. Those doing so are only affecting themselves. Non-payment of the total loan and/or interest charges means that the property becomes the right of the pawnbroker. This means they are at liberty to auction or re-sell it to recoup costs incurred through the original loan.

A solid, reliable way to secure a short-term loan:

Using pawnbroking services really is an ideal way to secure instant cash in the form of a short-term loan with agreed interest rates. The transaction can be completed in minutes and the recipient leaves with cash in their pocket.

Online pawnbroking:

Some of the more progressive pawnbrokers now offer online pawnbroking. This is extremely convenient for those who are not within easy reach of a pawnbroker’s store. The process is straightforward, delivery and receipt of items secure, and the agreed loan amount transferred promptly. This type of pawnbroking will surely rise in popularity as people realise its convenience and benefits.

Now you know how pawn shops work, you are probably wanting to take advantage of what can be offered. Visit our contact page to make an enquiry and one of our friendly staff will get back to you right away!