How Do Pawn Shop Loans Work? 

 June 22, 2021

By  Clark Pawners & Jewelers

 Do you need to make quick cash? Are there medical emergencies but wondering if pawnshops are a good option? How do pawnshop loans work?

You can consider loaning in pawn shops. When you visit a pawn shop and bring a valuable item, chances are, you will walk away with cash on hand.

Pawn shops give you cash right then and there in exchange for a valuable item you want to use as collateral. Pawnshop loans do not require lengthy application processes, credit checks, and long waiting periods.

The pawnshop sector has thrived for hundreds of years in helping people who need short-term loans. Pawn shops are regulated and licensed brokers that offer fast loans in exchange for collateral. Do you want to learn more about how loans at pawn shops work? Read further.

how do pawnshop loans work?

What Kind Of Stuff Do Pawn Shops Take?

First of all, what are the items pawn shops take? Almost anything valuable can be taken to a pawn shop in exchange for money. Anything valuable that can be resold can be taken to a pawn shop for a lump sum of cash. Example of these items are:

  • Necklace
  • Bracelet
  • Earrings
  • Engagement rings
  • Wedding rings
  • Pins or brooch
  • Watches
  • Any silver or gold jewelry

Of course, most pawn shops only take authentic and valuable jewelry. Shops usually look for proof of authenticity for brand-name watches and jewelry. Other pawn shops also accept collectible coins, rare paper money, power tools, and other household items.

How To Get A Pawn Loan?

So what is the process to get a paw loan? Here are the basic steps to follow:

  • Prepare a valuable item: If you need a quick loan, look for a valuable thing to use as collateral. It can be any jewelry or watch, or household item.

  • Call the pawnshop for an appointment: It is better to call the pawnbroker beforehand before visiting. Confirm first if they accept the item you’re about to bring. If you’re from Chicago, you can contact Clark Pawners & Jewelers.

  • Visit the pawnshop for appraisal: Show the staff the item you’re about to pawn. Learn how much is the loan amount offered, the interest rates, and terms.

  • Know the loan amount: It is important to consider the loan amount before agreeing to any terms. A pawnbroker typically offers between 20-60% of the item’s resale value. Do not expect to receive the exact cost of the item when you bought it. For instance, the jewelry costs $2,000, and the store can offer as much as $1,200 cash as a loanable amount.

  • Know the loan terms: When can you pay back the principal amount plus interest? Is it after 30 days? Two months? Three months? Know the loan terms first and how long you can come up with the cash to pay back the item.

  • Know the interest rates: Of course, you have to know how much the interest rates are. Interest rates of pawn shops vary; it could be as low as 10 percent per month or as high as 40%. Remember that you have to pay the principal amount plus the interest rate. The sooner you can pay back the item, the lesser the interest rate you have to deal with.

  • Leave the pawnshop with cash and your pawn ticket: As soon as you agree to the terms, you need to take a pawn ticket. You can use this pawn ticket to collect the item as you repay it. The pawn ticket typically contains all relevant information like item number, fees, loan term, interest rate, grace period, and final date on which the loan defaults.

  • Payback the loan: As soon as you’re ready to pay back the loan, return to the pawnshop to retrieve the item. Remember to pay back the principal amount plus the interest rate. In case of late payments, you can be charged extra fees. If you fail to collect the item, the pawnshop may put the item on sale for a fair price.

The Benefits Of Pawnshop Loans

Many customers resort to pawning in case of financial emergency. Of course, it has its pros and cons, but the benefits overshadow its cons. So what are the benefits of pawnshop loans? Here’s what you need to know:

  • If you can’t take a traditional loan (e.g., personal loans in banks or cash advance on credit cards), pawning is a fast and attractive option.
  • There is no credit check required. It means your credit score won’t get affected even if you don’t repay your loan. You won’t even have to worry about debt collectors bothering you with unending calls or to worry about any legal consequences if you can’t retrieve the item you pawned. Plus, you can make quick cash without having to wait for the long approval times.
  • The interest rates of pawnshop loans cost less as compared to other credit card fees. Plus, using your credit card and if you can’t pay on time can affect your credit score.

how do panwshop loans work

How Do You Determine The Value Of The Item?

If you need immediate cash and plan to get a loan, of course, you have to know how much money you can make out of it. So how do you determine the value of an item you’re about to pawn?

Pawn shops determine the item’s value you’re about to pawn depending on the current appraisal value, the current condition, and if the item will sell.

This means if you want to make bigger cash, you should pawn an item of good condition, high appraisal value, and it can be sold. Pawn shops have professional appraisers to determine the value of an item.

They also check the authenticity of jewelry, if it’s real gold, for any scratches, the value of gold or silver in the market today, or if it’s a collectible.

How To Repay Pawn Shop Loans?

If you have available funds to repay the item you pawned, you can retrieve the item anytime, even before the deadline. You can repay the loan in cash; other stores also accept credit card payments.

The deadline will, of course, depend on the agreed terms you had with the pawnshop. It can be in 30 days upon the initial transaction, up to a few months.

If you can’t repay the loan on the agreed terms, you may ask for an extension to renew the terms. If you can’t repay the loan, the store will put your item on sale for other customers to buy so that the pawnshop can take the money back they have loaned you.

how do pawn shop loans work?


How Do Interest Rates Work?

Pawn loans can accept any valuable item, regardless of the value, it can be high or low. When paying back your loan, always prepare the principal amount you owed plus the interest. So you may ask, how much is the interest rate? It depends on three factors:

  • It will depend on the interest rate offered by the shop.
  • It will depend on where you live, as fees may vary from state to state.
  • The term or period where you can repay the item.

Some stores have interest rates for as low as 5% per month, and some can reach up to 25%. Remember that the sooner you can repay back the loan, the lower the interest rate you have to deal with. Of course, you always want to choose the lower interest rates.

All pawn shops adhere to state-regulated rules. If you want to learn about the maximum pawnshop loan rates allowable in your city or state, check your state’s website, and search for relevant information about the customer’s protection.

Are Pawn Shops Regulated?

Yes, pawn shops are regulated by federal laws designed to protect customers and financial institutions. The federal laws that regulate the pawnshop industry are the Equal Credit Opportunity Act, Truth in Lending Act, Patriot Act, and Data Privacy and Safeguard of Consumer Information under the Federal Trade Commission (FTC) Rules.

There are state requirements pawn shops should adhere to, and it’s been around for decades. In addition, pawnbrokers should meet the regulation and licensing requirements of local authorities. The National Pawnbrokers Association (NPA) also advocates pawn shops in the country to offer good customer service and fair practice to all.

Frequently Asked Questions

How Do You Borrow Money From A Pawn Shop?

You can borrow money from a pawnbroker by pawning collateral. This can be anything of value like jewelry or a watch. Anything that can be sold and with value can be used as collateral to borrow money from the pawnshop.

What’s The Most Amount A Pawn Shop Will Loan?

The most amount a pawn shop will loan is 25-60 percent of the projected resale value of the item. Other people perceive loaning the full value of the money, but it doesn’t work that way. Even when you sell an item, you can’t expect to receive its full appraisal value.

What Percentage Does A Pawn Shop Give You?

Pawn shops can give you 25-60 percent of the item’s market value. In general, the higher the item’s market value, the higher percentage you can receive. Collectible items or jewelry in demand have a higher percentage too. For example, watches like Rolex or bracelets from Cartier are more valuable.

How Long Do You Have To Pay Off A Pawn Loan?

You can pay off a loan for as early as 30 days to a few months. During that period, the pawnshop keeps the item you pawned until you can pay it back. The longer you can pay off the loan, the higher interest rates you’ll potentially have to pay.

Can You Extend A Pawn Loan?

Yes, you can extend the terms of the loan in case you can’t pay it back. You can visit the shop and ask for an extension until you can pay back the loan. However, with the extension, you are expected to pay fees of the portion of the interest you owe.

Do Pawn Shop Loans Affect Your Credit?

No, pawnshop loans do not affect your credit score. Since loaning in a pawnshop does not require any credit check, it will not affect your credit score, even if you’re unable to pay the item back.

What Happens If You Don’t Pay Back A Pawn Loan?

If you’re unable to pay pawn loans on their due date, you can ask for an extension, or the shop will put the item on sale. That’s why it’s important to take note of your due date or set the alarm so you won’t totally lose the item.

how do pawn shop loans work?

Do You Need a Quick Loan?

Do you need a quick loan? Are there emergency repairs in your house or a medical emergency? Are personal loans out of the question? Are all your credit cards all maxed out? Get a quick loan from Clark Pawners and Jewelers today!

Bring your jewelry, watch, wedding ring, or engagement ring to get fast cash. Here at Clark Pawners, we accept items for short-term loans like:

  • Jewelry (Watch, ring, necklace, bracelets)
  • Power tools (like an air compressor, angle grinder, ceramic tile cutter, etc.)
  • Electronics (mobile phones, gadgets, computers, TVs, stereo equipment, etc.)
  • Small appliances
  • Video games & gaming systems (Playstation, Xbox)
  • Sporting equipment (Treadmill, spin bike, etc.)
  • Musical instruments (Guitar, violin, etc.)
  • Many more! If you have valuable items at home, you can pawn them over to our shop to appraise them.

Say goodbye to high-interest rates and negotiate the terms you’re comfortable with. Here at Clark Pawners, we aim to help you in times of your financial needs.

About Clark Pawners & Jewelers

Clark Pawners & Jewelers is the best jewelry and watch repair service in Chicago. Aside from cash loans, we also offer cleaning and refurbishing services, ring sizing, and buying and selling jewelry. So if you need to purchase an engagement ring for the love of your life or wedding bands when you tie the knot, we’re here for you.

Clark Pawners & Jewelers is a family-owned jewelry shop that has been around since 1935. We have experienced staff members ready to be of service to you in any of your needs. Contact us today for more information at 773-974-3533 or book an appointment for a faster transaction once you arrive.

Clark Pawners & Jewelers is your trusted pawn shop in Chicago. We buy and sell jewelry, diamonds, gold and more, aside from offering cash loans.

Clark Pawners & Jewelers

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