What is a pawn shop loan?
A short-term loan secured by something you own
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A pawn shop loan is a type of secured loan you can get at a local pawn shop. The shop gives you cash in exchange for holding on to something you own. You’re essentially guaranteeing the loan with an item you provide, such as jewelry, appliances or valuable electronics.
Most pawn shops let you borrow 25% to 50% of what your item could sell for, though exact offers vary from store to store. So if your TV is worth around $250, you might walk out with $60 to $125 in cash.
Because you're offering collateral, pawn shops don't require a credit check, and they’ll give you cash upfront. You have to repay the loan in full, including any interest, to get your item back. Usually, you have a minimum of 30 to 60 days to pay off your pawn shop loan, but if you don’t pay it off, the pawn shop owner can sell your collateral to recoup its investment.
Interest rates on pawn shop loans can be high, as much as 200%, which makes them a bad deal for borrowers. But if you’re in a tight spot and need money before payday, a pawn shop loan can help you get cash immediately.
Pawn shop loans let you borrow money quickly by using personal items as collateral.
Jump to insightYou can usually borrow up to 50% of your item’s resale value, and loans typically must be repaid within 30 to 60 days.
Jump to insightInterest rates on pawn shop loans can be extremely high, which makes them a risky long-term option.
Jump to insightPawn shop loans won’t affect your credit score since they don’t require a credit check.
Jump to insightAlternatives like selling valuables or getting a 0% annual percentage rate (APR) credit card may be more cost-effective.
Jump to insightHow pawn shop loans work
You can get a pawn shop loan by bringing an item of value to a local shop. According to the National Pawnbrokers Association, there are more than 10,000 pawn shops in the U.S., so it’s usually easy to find one near you.
To get a loan, you’ll need to bring in something the shop is willing to hold as collateral. The pawnbroker will inspect the item, estimate its resale value and offer you a loan for a percentage of that value, usually up to 50%.
Some common items used for pawn shop collateral include:
- Jewelry: Gold, silver, diamonds, necklaces, rings and luxury watches
- Musical instruments: Guitars, keyboards, drums and audio gear
- Electronics: Phones, laptops, tablets, TVs and game consoles
- Vehicles: Cars, motorcycles, RVs or even boats at some shops
- Power tools: Name-brand tools like DeWalt, Milwaukee or Makita
- Firearms: In states and counties where allowed
- Designer goods: Handbags and other items from brands like Louis Vuitton, Hermès, Gucci or Chanel
- Collectibles: Rare coins, sports memorabilia or vintage items
If you accept the offer, the shop will give you a pawn ticket, which acts as your contract. It outlines the loan amount, fees, repayment timeline and what happens if you don’t repay. You’ll need this ticket to reclaim your item.
Pawn shop loans don’t require monthly payments. Instead, you repay the full amount plus interest by the due date, typically 30 to 60 days. Some states set minimum loan terms, but exact rules and rates depend on the shop. You might be able to extend the loan if you need to, although that can add more interest and fees.
If you don’t repay the loan, the shop keeps your item and can sell it. But according to the National Pawnbrokers Association, about 85% of borrowers repay their loans and reclaim their items.
» LEARN: How do loans work?
Advantages and disadvantages of pawn shop loans
Pawn shop loans can help people who need access to cash quickly, especially those with poor credit or limited access to traditional banks. But poor valuations and high interest rates can make pawn shop loans an expensive way to borrow in the long run.
Here are some pros and cons to consider:
Pros
- You can get cash the same day.
- You don’t need a credit check.
- Most loans (85%) are repaid.
- You can borrow money using items you already own.
Cons
- Rates can reach 200% or higher.
- You risk losing your item if you don’t repay on time.
- Loan amounts are usually small unless your item is very valuable.
- Repayment windows are short, sometimes just 30 days.
Requirements for a pawn shop loan
There are very few requirements to qualify for a pawn shop loan. You don’t need to fill out an application, provide financial information or undergo a credit check. Because pawn shop loans aren’t reported to credit bureaus, they won’t help your credit score either.
Pawn shop loans are fully secured by the collateral you bring in, so the only requirement to get a loan is having an item of value that the pawn shop is willing to loan money on. You’ll also need to sign an agreement to pay back the loan. If you don’t repay, the pawn shop will own your collateral and can sell it.
You’ll need to provide a valid photo ID and proof that you own the item you’re pledging as collateral.
Alternatives to pawn shop loans
Pawn shop loans can give you quick access to cash, but the high interest rates and risk of losing valuable items may make it worth looking into alternatives. Here are some other sources of quick cash to consider that come with fewer risks and lower costs:
- Selling your valuables: Instead of pawning your items, consider selling them outright if you don’t mind parting with them. You may get more money for your items through online platforms like eBay or Facebook Marketplace.
- 0% credit cards: If you need money but want to avoid interest, a 0% credit card could help. These cards offer no interest on purchases or balance transfers for 12 to 15 months.
- Personal loans: Unlike pawn shop loans, personal loans are unsecured, so you can borrow more, pay less in interest and get a predictable monthly payment. You can usually apply online and receive funds within a few days.
- Peer-to-peer loans: These are personal loans funded by individual investors through a peer-to-peer lending platform. If you’ve had trouble getting approved through a bank due to average or fair credit, these platforms may give you more flexibility, although interest rates are usually higher.
- Cash advance apps: While cash advances are generally a bad idea, some apps let you borrow small amounts with no fees until your next paycheck. Be sure to repay on time. Otherwise, fees and interest can add up quickly.
FAQ
How does a pawn shop loan work?
Pawn shop loans work by allowing you to use an item you own as collateral for a loan. The shop estimates its resale value and offers you a loan based on that amount. It holds your item until the loan is repaid.
You usually have 30 to 60 days to pay back the full amount, including interest. If you don’t, the shop takes ownership of your item and can sell it to recover its money.
Do pawn shop loans affect your credit?
No, pawn shop loans don’t affect your credit score, either positively or negatively. Since pawn shops don’t run credit checks or report payments to credit bureaus, taking out a pawn shop loan won’t help you build credit. And because the shop keeps your item if you don’t repay, your credit also won’t be damaged if you default on your loan.
What happens if you don't repay a pawn shop loan?
If you don’t repay a pawn shop loan, you might be able to extend it, though that usually means paying more in interest and fees. If you can’t repay the loan at all, the pawn shop keeps your item and can sell it to recover the money you borrowed.
How are pawn shop loan interest rates determined?
Pawn shop interest rates are determined by each individual pawn shop, but some states regulate the maximum interest rate that can be charged. For example, Pennsylvania limits pawn shop loans to 3% per month, including interest and fees. Your rate will be included on your pawn ticket.
Is a pawn shop loan worth it?
A pawn shop loan might be worth it if you need fast cash and don’t have other options. It won’t affect your credit score, and you won’t be locked into monthly payments. But with high interest rates and the risk of losing your item, it’s not a good solution for long-term borrowing. Pawn shop loans are best for one-time emergencies when you’re confident you can repay quickly.
Article sources
ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
- National Pawnbrokers Association, “Pawn Industry Statistics.” Accessed May 8, 2025.
- Pennsylvania General Assembly, “1937 Act 51.” Accessed May 8, 2025.
