How does a pawn loan work?

A pawn loan is a short-term loan secured by an item you leave with the shop, such as jewelry, tools, or electronics. The pawnbroker evaluates the item, offers a loan amount, and gives you a pawn ticket that shows the loan terms, fees, and due date. You keep ownership of the item as long as you repay on time.

When you repay the loan plus interest and fees, you get your item back. If you do not repay by the deadline or any grace period, the shop typically keeps the item and sells it, and the debt is considered settled. In most places, a pawn loan does not go on your credit report and no one comes after you for the balance.

Interest rates, fees, and loan periods are regulated by state law and vary considerably. Always read the ticket and ask questions before you sign.