What Does Pawning Something Mean

What does pawning something mean? When someone pawns something, they are taking out a loan using one of their possessions as collateral. The pawn shop owner will provide funding and hold onto the collateral until the original owner has paid back their loan in full plus interest and any fees. Once their loan has been paid off, the original owner can get their item back. However, if they fail to repay their loan the pawn shop owner has the right to sell the collateral. It’s estimated that over 30 million Americans utilize pawn shops and pawn shop loans ever year!1

For our purposes, pawning something is a part of the financial industry. People can usually always go to a pawn shop and pawn something to get some fast money. If you are thinking, “I need 100 dollars now“, you may be considering pawning an item you own. A person’s purposes for wanting to pawn something may be to: 

  • Cover a deposit
  • Catch up on bills
  • Payback another loan
  • Have some extra cash 

Check out the information below to learn about how pawn shops work and if they’re worth it

What Happens When You Pawn Something?

The act of pawning in the financial industry refers to a person selling a piece of personal property to a pawn shop. A person may pawn most anything from a watch to a full-size vehicle. 

When a person pawns something, they bring a piece of property to a pawn shop for a pawnbroker to evaluate. When bringing in the item, the seller may request a price at which they’d like to sell their property or wait for the pawnshop owner to give them an estimate. If the item has enough equity, the pawnshop owner will provide the seller with an offer. If the seller accepts, they will give the pawnshop whatever item they choose to give up, and the pawnshop owner will provide them with the agreed-upon monetary amount. After this transaction, the original seller has no legal right to whatever they sold to the pawnshop. It is up to the discretion of the pawnshop owner what happens to the item, or items, next. 

What Is a Pawn Loan?

Instead of selling your items forever, many pawn shops also offer pawn loans. A pawn loan is when a person gives up possession of something for a brief period of time in exchange for money. Whatever item the borrower pawns stays in possession of the pawnshop while the borrower pays back their loan. Fortunately, pawn shops typically have high security, so borrowers don’t have to worry about their items being lost or stolen. Once the borrower pays back the pawnshop owner, they may get their item back. If the borrower does not pay back the pawnshop owner, they have the right to keep and sell whatever the borrower pawned. 

More Information About Pawns

Interest RatesVaries from 2% to 25% per month, depending on state regulations and individual pawn shop policies.
Loan Term LengthUsually 30 days, but it can vary. Extensions or renewals may be available at additional costs.
Item Appraisal Process Items are appraised based on their current condition, market value, and the pawn shop’s expertise.
Customer Identification Valid government-issued ID is typically required to pawn an item, ensuring transactions are legitimate.
Item Retrieval Process Items can be retrieved by repaying the loan amount along with any applicable interest and fees.
Default Consequences Failure to repay results in the pawn shop keeping the item, and it may be sold to other customers.
Regulations and Licensing Pawn shops are regulated by federal and state laws, and they must be licensed to operate.
Confidentiality Pawn shops usually ensure customer confidentiality and do not report defaulted loans to credit bureaus.
Commonly Rejected Items Items in poor condition, outdated electronics, or items with limited resale value may be rejected.
Negotiation Possibility Prices and terms are often negotiable, but it depends on the pawn shop’s policies and the item’s value.
Disclaimer: The information provided in the above chart is intended for general informational purposes only and should not be considered as financial or legal advice. The details, such as interest rates, loan terms, and appraisal processes, may vary based on location, specific pawn shop policies, and applicable state and federal laws. Consumers are encouraged to conduct thorough research, consider their specific circumstances, and consult with a professional if necessary before entering into any pawn transactions.

Pros and Cons of Pawn Shops

Consider the pros and cons before you pawn something or agree to a pawn loan. While pawning something can be a quick way to get cash, especially when you have a bad credit score, they come with harsh stakes.

Unfortunately, money borrowed through a pawn loan often comes with many inconveniences. To start, pawn loans may come with extremely high-interest rates. These high rates may cause the borrower to pay the pawnshop double the amount of their original loan amount or more! There is also the added stress of losing a potentially loved piece of property if the borrower does not adhere to the strict pawn loan terms and rates. 

If you are not willing to risk potentially losing whatever item you gave the pawnshop, you should stay away from pawning altogether. There is a good chance there is a better way for you to find the money you need.

What Is the Difference Between a Car Title Pawn and a Car Title Loan?

People who own a vehicle have several ways of using it in order to access money quickly. Two of the most popular ways borrowers do this is through car title pawns and car title loans. While both of these forms of funding use the value of a person’s vehicle to secure a loan, they have some significant differences everyone should be aware of. 

Title loans are a type of secured loan where the borrower uses their qualifying vehicle title as collateral. For the duration of a title loan, the borrower signs onto the borrower’s vehicle title as a lienholder. Being a lienholder means the lender has partial ownership over the borrower’s vehicle during their title loan. However, borrowers are able to keep their car to drive every day like normal while they pay back their loans. 

Car title loans also usually come with high-interest rates and a short payback schedule. These inconvenient terms and rates may ultimately leave title loan borrowers looking for companies that pay off title loans

With a car pawn loan, borrowers give up possession of the vehicle entirely for the duration of their loan. The car stays in the control of the pawnshop owner while the borrower pays back the loan. During this time, the borrower cannot access their vehicle and may not use it until they have paid back their pawn shop loan in full. 

What Are Some Quick Funding Alternatives Instead of Pawning Something at a Pawn Shop? 

Pawning something is a risky decision. Below are a few funding options that may work better for you instead of pawning a loved possession. 

Payday Loans

Instant online payday loans are one type of bad credit loan readily available to almost anybody. Similar to car title loans, payday loans also come with brief terms and high rates. Payday loans work best for borrowers looking for minimum loan amounts and who are able to fully pay back their loan within approximately 14 days or less. 

Personal Installment Loans 

For borrowers looking for a reasonable payback schedule, larger loan amounts, and more convenient interest rates, an installment loan is perhaps the best option. Installment loans are a type of funding borrowers pay back in fixed monthly payments, making them a convenient option for people looking to keep their finances organized. 

Credit Cards or Cash Advances

People may also use a credit card to cover purchases or use their card to take out a cash advance. Credit cards are a revolving line of credit, which means account owners have access to a renewed credit limit every month. But, credit cards are also known for coming with high-interest rates. To avoid massive credit card debt, you may not want to use your credit card for larger expenses unless you can pay back the balance quickly. 

Clean Up Your Finances 

Perhaps you don’t need to take out a loan or sell anything at all. You may find that getting your finances organized and learning to budget with irregular income is all you need. Creating a budget and having all your expenses displayed in one place makes it easier to see where your money needs to go and how much you may have leftover after everything is paid. 

Thankfully, there are plenty of convenient alternatives for people to access money, so they don’t have to pawn anything! 

FAQ: Pawning Personal Property

What does it mean to pawn personal property?

Pawning personal property means temporarily handing over an item of value, such as jewelry or electronics, to a pawn shop as collateral to receive a loan. The pawnshop holds the item until the loan, along with any interest and fees, is repaid.

Can I pawn a diamond ring, and how is the loan amount determined?

Yes, you can pawn a diamond ring. The loan amount is determined based on the ring’s appraised value, condition, and the pawn shop’s existing inventory and policies.

What happens if a person serving in the military wants to pawn an item?

A person serving in the military can pawn an item, but they should be aware of specific regulations and protections under the Military Lending Act, which might affect the terms of the pawn loan.

How do pawn shops determine the lowest value they are willing to offer for an item?

Pawn shops consider various factors such as the item’s condition, age, brand, and resale value, as well as the shop’s current inventory, to determine the lowest value they are willing to offer for an item.

Is it possible to negotiate the loan amount when pawning an item?

Yes, it’s possible to negotiate the loan amount. Pawnbrokers may be willing to discuss the terms, including the loan amount and interest rates, to reach an agreement that suits both parties.

What types of items are commonly pawned at pawn shops?

Common items include electronics, jewelry, musical instruments, tools, and designer accessories. Different pawn shops might specialize in various categories of items.

What happens if I am unable to repay the pawn loan?

If you’re unable to repay the pawn loan, the pawn shop has the right to keep and sell the pawned item to recover the loan amount and any additional charges.

How secure are my items when pawned at a pawn shop?

Pawn shops are regulated and must follow laws that ensure the safety and security of pawned items. They usually have security measures in place to protect the items from theft or damage.

Can I extend the repayment period of my pawn loan?

Some pawn shops may offer the option to extend or renew the pawn loan, but this might involve additional fees and higher interest rates.

What should I consider before deciding to pawn an item?

Before pawning an item, consider the loan amount offered, interest rates, repayment terms, and the sentimental value of the item. Ensure that you are comfortable with the risk of potentially losing the item if you cannot repay the loan.

CreditNinja’s Thoughts on Pawning 

While pawning your personal items may seem like a fast way to get quick cash, it may not always be the best solution. You may end up regretting giving up your belongings, or not be able to pay back your loan in time and risk the pawn shop owner selling your things. Instead, CreditNinja suggests other borrowing options such as using money from your own savings accounts, using a credit card, or even getting an unsecured personal loan

Learn more about getting the right kind of loan, handling your budget, and more in the CreditNinja blog dojo! 


  1. Chart: What Americans Pawn When They Need Cash | Statista

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