How a Pawn Shop works
A “pawn” is a loan of money given on the value of a piece of
real property or asset that is held as collateral by the
pawnbroker until the loan is repaid. Items left for
collateral range from home electronics, jewelry, vehicles,
tools, or any other item of value that would remain in our
warehouse until the loan amount is repaid with interest.
Loan amounts are determined by taking the new or verifiable
market value of the secured collateral and deducting a
percentage of that value and using that as the loan amount.
Generally, the loan amount is equal to 25% to 1/3 of the
market value of the collateral. The loan term is thirty
days. The customer has the option of redeeming their
collateral at the amount that they borrowed plus an interest
fee or simply paying the accrued interest amount by the end of
the loan term to extend their loan for another thirty
Items not redeemed or not renewed by the end of the loan term
are susceptible to being sold to re-coup the cost of the loan,
plus any amount over that up to fair market value.