A Pawn Loan is a loan that is secured by collateral held by the Pawn Broker. Different Pawn shops loan on different items.
All customers provide collateral, eliminating the need to distinguish high-risk from low-risk borrowers.
Typically, loans are small, averaging between $50 and $200, although they can be as small as $20 or as high as several thousand dollars depending
on the value of the collateral.
How does Pawn Work?
The process is much the same as any other lending institution, with the primary difference being the size of the loan, no credit check, the
collateral and the storage of the merchandise until the loan has been repaid.
Pawn Loans are written for four months (120 days).
At the end of that period the customer is required to repay the loan in full plus the interest due and the collateral is returned. If the customer
cannot pay the loan in full, the option of paying only the interest due and rewriting the loan for another four months is available. If the
customer does not repay the loan in full plus the interest due or rewrite the loan by the due date plus a 10 day grace period, the collateral
is forfeited to the pawn broker.
All interest rates and terms of a loan are governed by the State of California and cannot be changed or modified by the Pawn Broker. A state
licensed Pawn Broker is the only one who can legally write a Pawn Loan.
