How Does a Pawn Loan Work?

While people have been doing pawn loans for centuries, most people don’t know how a pawn loan works or what it is. In this article, we’ll go over the basics of pawn loans and how they work at Empire Loan!

What Is A Pawn Loan?

To start, a Pawn or Collateral Loan is when you provide something of value to the lender or pawnbroker to hold in exchange for a cash loan. The pawnbroker holds the item(s) until you repay the loan and you get your item(s) back. That’s essentially what a pawn is and how the process works. 

In modern times, pawn loans work in the same way: pawnbrokers lend you money based on the collateral you provide to secure the loan. The process should be transparent and include clear documentation of the items you provided and what the terms of the loan are.

How Can I Get A Pawn Loan?

At Empire Loan in Massachusetts and Rhode Island, customers bring in items like gold & diamond jewelry, electronics, musical instruments, tools, designer handbags and other items with a secondhand value as collateral to secure the loan. The pawnbroker will appraise your items based on their condition and a percentage of the secondhand value of the items, then offer you a loan based on that value. Background checks or credit reports aren’t necessary, just a valid, government issued ID and you can walk out with cash in minutes.

What Are The Terms Of A Pawn Loan?

The Pawnbroker will give you a ticket with details on what you brought in to secure the loan and a detailed description on the repayment terms. In Massachusetts the loans are for 4 months (3 months in Rhode Island) and charge monthly interest that is set by the local city or town. There are no monthly payments and you won’t have to pay anything until the loan is due. You can redeem your loan any time by simply paying the amount borrowed plus any interest and fees that may have accrued by then.  You can also choose to simply pay just the interest and fees that are due to renew the loan for another 3 or 4 month period depending on where you did the loan. It’s that simple!

At Empire Loan we are proud to say that over 90% of our customers redeem their loan and get their items back!

Contact Empire Loan!

If you have any questions about pawn loans, feel free to contact Empire Loan! With eight locations across Massachusetts and Rhode Island, we’re the region’s best and most reliable pawn shop! Contact us today at any one of our locations or call us toll free at (800) 375-PAWN.