How do pawnbrokers work

If an item is “pawned” for a loan, it is usually for around 6 or 7 month term. Once you have pawned the item, you can either have the loan for the full term or you can pay off your loan early and get your item back. If the loan is not paid within the term (some pawnbrokers allow you to extend the term), the pawnbroker can actually sell your item. If this happens, the pawnbroker does not report the defaulted loan on the customer's credit file as selling the item means they regain any money they would have lost from the loan.

How do I get a pawnbroker loan

You must take your item into a pawn shop. If you have never done pawnbroking with the particular company before, they may require you to register with them which may involve you providing proof of ID and proof of address.

The pawnbroker will then assess the item for its condition by testing the item (if electrical) and examining it for flaws, scratches or other damage (diamonds/jewellery). Once they have decided on the value, they will tell you how much they are willing to lend the item against.

You can either accept or decline their offer. If you accept, you will need to sign a loan agreement which will explain the terms of the loan. Your item will then be stored in a safe somewhere in the branch for you to collect when you have paid the loan off. Or, you can do it online (explain online process).

Who can get a pawnbroker loan

Anyone who has a personal item or jewellery item that they don't mind not having possession of for a few months. You generally must be 18 years of age or older with proof of ID and proof of address to pawn an item. A lot of people who have pawnbroker loans have bad credit. For UK pawnbrokers, you must be a UK resident.

What might they accept as security

Examples of items that pawnbrokers may lend against:

• Jewellery
• Stereos
• Hi-Fi equipment
• Musical Instruments
• Playstations, Xboxes, etc.
• Antiques
• Art
• Furniture
• Fine Wine

Other larger pawnbrokers such a Borro and Borro Premier can lend against:

• Luxury cars
• Private aeroplanes
• Yachts
• Speedboats

Where can I find a pawnbroker

Your local town centre will usually have a pawn broking service, this may be inside a jewellers or inside a cheque cashing centre. For example, a Cash Converters. There are also larger nationwide pawnbroking services that tend to have shops in every town.

If you are unable to get down to your local shop, or if your area doesn't actually have a local pawnbroker, there are online pawnbrokers. It is becoming more and more popular for people to pawn their items via an online service. This includes the company sending out a pack to you in the post and you sending your item back to them (insured) so they can evaluate it. They will then offer you some money and you can either accept or decline. If you accept, they will transfer the money into your account or send you a cheque.

Advantages of using a pawnbroker

These apply to the majority of pawnbrokers:

• No credit checks
• It's a confidential service
• Cash is paid out instantly (unless done online)
• You still retain ownership of your valuable items
• There is minimal paperwork
• It's quick and really easy
• Interest is not very high
• It is an affordable service

Disadvantages of using a pawnbroker

Depending on what companies you use:

• The interest rate could be quite high
• You may lose the item you pawned if you do not pay the loan back when agreed
• You may not be able to borrow the full value of the item

Is a pawnbroker right for me

A pawnbroker may be the right option for you, if you have bad credit and you have personal items that you don't mind using as security for a few months, this could be a good option for you.

See all Pawn Brokers