How do pawn shops work are they worth it

By Izzy M
Modified on April 16, 2024
how do pawn shops work

If you lack the money necessary to cover a surprise expense, you may be considering pawn shop loans. Before visiting a store location in person, learn how pawn shop loans work and if they are worth it.

What Are Pawn Shops?

Are you wondering, How do pawn shops work?” Pawn shops are essentially retail stores run by pawn brokers. Most pawn shops buy merchandise for resale in addition to providing collateral-based financing. You can visit a pawn shop to sell or pawn your valuables if you need money. 

When you walk into a pawn shop, you will find all sorts of unique items for sale. You can browse through fine jewelry collections, electronics, antiques, musical instruments, and much more. The items listed for sale were either sold for extra cash or are assets from unpaid loans. Contrary to popular belief, pawn shops do not carry stolen merchandise. A pawn broker is unwilling to risk criminal charges for selling stolen goods. 

Buying from a pawn shop may be a cheaper alternative than buying items from traditional retail stores. Suppose you are on the lookout for a nice pair of 18K gold hoops. You may be able to buy a pair for a reasonable price at a pawn shop than at a jewelry store. 

If you need fast cash but don’t want to have a garage sale, you can pawn or sell items at a pawn shop. For example, if you have a PS5, you can sell it if you no longer have any use for it. But if you only require short term cash and prefer to keep your PS5, you can apply for a pawn loan. Once you successfully repay the loan amount, you can get your PS5 back! 

To find a local pawn shop in your neighborhood, visit the National Pawnbrokers Association website to find a licensed vendor.  

How Do Pawn Shop Loans Work?

Pawn shop loans are secured short term loans available at pawn shops. Eligible borrowers can pawn valuable items to get quick cash in their bank account.

To get a pawn shop loan, you generally need to meet these requirements:

  • Be at least 18 years of age
  • Have a valid government-issued ID
  • Have a high-value item

The pawn industry is lucrative because the approval process is quick. Borrowers could receive money in their hands the same day they apply, along with a pawn ticket indicating the loan terms. Unlike traditional loans, the qualification requirements are easy to meet. Your credit score does not have to be good to qualify for pawn loans because the money is secured through an asset. 

Unsecured loans rely on your credit history to make a qualification decision. Traditional lenders conduct a credit check to see if you are a reliable borrower. Meanwhile, pawn shops base loan eligibility on the value of the item you use as collateral and not on your credit score. 

How Much Can I Get With a Pawn Shop Loan?

If you need quick cash, you can visit pawn shops to apply for a loan. But how much can you get? Brokers base the loan amount borrowers are eligible to receive on the item’s value, the current condition, and the market demand. 

When you want to pawn your personal property, a broker will appraise your item and then offer a loan based on a small percentage of the overall value. Suppose you have a designer aviation watch worth $1,000. You could receive a few hundred dollars for upcoming bills through the pawn transaction! 

A pawn broker will usually accept most high-value items, but you could also pawn low-value items such as books! The items accepted as collateral varies by location, so it’s a good idea to call ahead and ask what personal property is acceptable. 

These are a few items you could pawn to borrow money:

Fine Jewelry Pieces

If you have any type of fine jewelry, you can take it to a pawn shop. Jewelers classify fine jewelry as jewelry made from gold, silver, or platinum. Fine jewelry is more valuable if it has precious stones, such as diamonds. The value of precious stones depends on the weight (carats). The higher the number of carats, the more valuable a fine jewelry piece is. A broker will give you the current appraised value of your fine jewelry and make a loan offer. 


If you recently lost your job and can’t pay bills due to unemployment, one option is to pawn a laptop for extra money. The laptop must be in working condition and have a matching charger. A broker will appraise your laptop using the manufacturer, year, RAM, screen size, and other details. Depending on the specs, you could get a few hundred dollars from most pawnbrokers for your outdated laptop. 


If you recently bought a new phone, you could pawn your old one for easy money. Keep in mind you may not receive a lot of money if you have an old model with limited gigabytes. But suppose you have a newer phone in excellent condition, such as an iPhone 12. In that case, you could get a few hundred dollars for rent assistance and other emergencies

Gaming Consoles and Video Games

If you have a gaming console sitting around, you can bring it along with the video games to a pawn shop for cash. Older consoles may not offer as much money, but there are exceptions. There are quite a few rare gaming consoles to keep an eye out for. For example, the Pikachu N64 set could be worth over $1,000! The only way to know how much your gaming console is worth is to have it appraised by a broker.

Gym Equipment

It happens all the time. People buy gym equipment with high lofty goals, and then those dumbbells gather dust in the basement. If you have gym equipment just sitting around, you can pawn those items for a short term loan. Brokers typically accept dumbbells, treadmills, stationary bikes, ellipticals, and more. 

What Are the Interest Rates With a Pawn Shop Loan?

The interest rates with a Pawn shop loan are notorious for being extremely high. Brokers know that most of their customer base has bad credit, so they charge such high-interest rates. When people have limited financing options and an impending deadline, they don’t have the time to find a lender that provides affordable terms. 

Pawn Shop Loans vs. Personal Loans

A pawn shop loan is convenient, but other loan options are available that may offer more money and better rates, such as a personal loan

What is a Personal Loan?

Personal loans are installment loans that do not require collateral. Qualification for personal loans depends on your credit score and your income. If you have a low credit score, you should still apply for personal loans because the requirements are flexible! You could be eligible for unsecured loan amounts despite a history of late payments or unestablished credit history. If you don’t have an established credit history no credit check loans are another option, they often come with higher APRs but can approval individuals with no credit check necessary.  

How Much Can I Get With Personal Loans?

The loan amount you could get with a personal loan is based on your credit and income. You could apply for a few hundred dollars or a few thousand dollars. For this reason, personal loans are used for various expenses, such as medical bills, credit card debt consolidation, and refinancing student loans. Although, it’s always a good idea to borrow only as much money as you need. You can get a preapproval decision and a free loan estimate by inquiring about a personal loan online. 

What is the Repayment Length With Personal Loans?

The repayment length with pawn shop loans is typically short, only lasting a month on average. This may not be enough time to come up with the total loan amount and additional fees. On the other hand, personal loans have flexible repayment terms. You could request either short or extended loan terms! 

You can save on interest fees and regain your financial independence sooner with a short repayment length. But if you need a lot of money to pay off a hospital bill, you can request an extended repayment length to receive smaller monthly payments. 

What Are the Interest Rates on Personal Loans?

Pawn shop loans have high-interest rates, making repayment a struggle for borrowers. If you cannot afford the excessive fees of pawn shops, you could risk losing that precious family heirloom! The interest rates vary with personal loans, but they are generally lower than most fast cash loan options. With affordable rates, the repayment process is easier on your finances. 

In Conclusion 

A pawn shop loan is convenient for most people who need financial assistance because credit is not a qualifying factor. You can use a high-value item as collateral to get quick cash if you have a low credit score. But the high-interest rates and short repayment terms can result in financial struggles. 

Many people settle for pawn shop loans because their credit score is bad. But there are affordable financing options available for anyone! Are you looking to get loans for bad credit online? Consider personal installment loans! Research all of your loan options carefully before borrowing money and applying for a pawn shop loan. 


What Can I Pawn
Rare Gaming Consoles

Read More
how to get rid of late payments on credit report
You can only get rid of late payments on a credit report if there was a credit reporting error or fraud—which can be done through…
missed payment for car repo
While missing just one payment may not do severe damage to you as long as you are able to contact your lender and cover the…
struggle meals
Looking for the best struggle meals available? Sometimes eating healthy when you are on a budget seems like an impossible task. Instead of getting extra…
Credit Score Simulator Paying off Debt
A credit score simulator is a tool that can show you an estimate of the impact of your actions on your credit, actions such as…

Quick And Easy Personal Loans Up To $2500*