Quick answer
A pawn shop loan uses an item you own as collateral. You leave the item, get cash and a pawn ticket, and have a set time to repay the loan plus charges to get the item back. If you don't, the shop can keep and sell it. Fees and timelines are set by state law and the shop, so read the ticket before you sign.
A pawn loan is one of the oldest forms of credit. It is simple and secured by something you hand over.
How a pawn loan works
- Bring an item such as jewelry, tools or electronics.
- Get an offer based on the item's value to the shop.
- Receive cash and a pawn ticket. The ticket lists the loan amount, charges, due date and item. Keep it.
- Repay the loan plus charges by the due date to get your item back.
- If you do not repay, the shop can keep and sell the item after any period required by your agreement and state law.
Pawn loan vs payday loan
| Pawn loan | Payday loan | |
|---|---|---|
| Collateral | Your item | None, but the lender gets access to your bank account |
| If you do not repay | You lose the item | Debits, fees, collections, possible lawsuit |
| Cost | Set by state law and the shop | $10 to $30 per $100, depending on state |
Payday loan details from the CFPB. Pawn loan terms vary by state.
Questions to ask before you pawn
- What is the total I must repay, and by when?
- Can I extend, and what does that cost?
- Is there a grace period after the due date?
- Can you pursue me for more than the item if I do not repay?
Lower-cost alternatives
- A credit union payday alternative loan, with APR capped at 28%.
- Selling the item outright, if you do not need it back.
- Local assistance through 211 for rent, utilities or food.
More ideas in alternatives to payday loans.
If you need more time than one paycheck, compare installment loans, which spread the cost over months with APRs on our network from 5.99% to 35.99%. Check eligibility there or call (800) 236-7761.
Payday, cash advance and title products are high-cost short-term credit. They are intended for short-term needs only and are not a long-term solution. This page does not match you for payday loans. Rates and examples are illustrations; a lender's written disclosure shows your actual terms, and approval is never guaranteed.
Frequently asked questions about pawn shop loans: how they work and what you risk
How much will a pawn shop lend me?
It depends on the item, its condition and the shop. Get offers from more than one shop if you can.
What happens if I can't repay a pawn loan?
The shop can keep and sell your item after the period in your agreement and state law. Ask whether the shop can pursue you for anything beyond the item.
Do pawn shops check credit?
Pawn loans are secured by the item, so the item's value drives the loan. Ask the shop whether it checks or reports credit.
Is a pawn loan better than a payday loan?
A payday loan gives the lender access to your bank account, which can lead to overdraft fees. A pawn loan puts your item at risk instead. Both can be costly; compare the full cost.
Sources
- CFPB: Do I have to put up collateral for a payday loan? (accessed 2026-10-09)
- CFPB: What is a payday loan? (accessed 2026-10-09)
- NCUA: Payday alternative loan rule will create more alternatives for borrowers (accessed 2026-10-09)
- 211: Find local help (accessed 2026-10-09)
Last updated 2026-10-09. How we research and update pages.