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How to get a pawn loan for fast cash
If you have any valuable possessions, you could use them to acquire a pawn loan.
A pawn shop is a great place to sell your items for cash, but if you’re not interested in selling, a loan from a pawn shop is a quick way to get extra cash without having to let go of what you own. All you need is something valuable – like a laptop or a piece of jewellery – that the shop can use as collateral. It’s like securing a loan with a prized possession, and as long as you repay your loan on time, you’ll get it back.
Although pawn loans can be relatively expensive, they often don’t require a credit check, which means you can get a loan no matter what your credit score looks like. Read our guide below to find out more about pawn loans.
⚠️ Warning: Be cautious with payday loans
Payday loans are expensive. If you're experiencing financial hardship and would like to speak to someone for free financial counselling, you can call Credit Counselling Canada from 8:00am to 5:00pm Monday to Friday at +1 866-398-5999.
Consider these alternatives before applying for a payday loan:
- Contact your creditors. Speak with creditors or your electricity, gas, phone or water providers about extending payment due dates or working out a new payment plan.
- Consider a personal loan. A personal loan usually comes with much lower interest rates than a payday loan.
- Pay with credit card. While not a long term solution, paying with credit card can help cover emergency expenses. You’ll need to pay off the balance before it accrues interest.
Cash Money Payday Loan
- Minimum loan amount:
- Maximum loan amount: $1,500
- Interest Rate: Varies by Province
- Fees: Up to $17 per $100 borrowed (rounded to nearest dollar)
- Loan term: 12-14 days. Varies by Province
- Turnaround time: In as little as 15 minutes with INTERAC e-Transfer® if approved
- Key requirements: Be 18+ years old, provide proof of recurring income
What is a pawn loan?
A pawn loan requires that you put up something valuable as collateral for the money you borrow. Pawn loans are typically for small amounts, $150 or less. You’ll have to pay back the principal amount plus interest, which can vary from as low as 10% to higher than 200% depending on where you live.
The shop won’t sell your valuables while the loan is active, but if you fail to repay your loan on time, those articles will be kept and possibly sold in the future. Like all loans, it’s important to know the due date and pay on time. If you do, a pawn loan is a quick and simple way to get cash without worrying about your financial situation.
How pawn loans work
These are the basic steps to a pawn loan:
- Take an item to a pawn shop to use as collateral. If you have something that’s worth a few hundred dollars, a pawn shop is likely to consider it for collateral. Examples of this include jewellery, newer smartphones and photography equipment.
- Consider the loan amount the pawn shop offers you. You’ll get a loan for a percentage of your item’s value, which is generally between 25% and 60% of the resale value. It’s a good idea to shop around when taking out a pawn loan, as some shops may offer you more for an article than others.
- Agree to the loan terms. Loan terms can vary between 30 days to a few months, and the interest you pay on your loan depends on your personal history with the pawn shop and any regulations in your province.
- Leave the pawn shop with your cash and pawn ticket. You’ll need that pawn ticket in order to collect your item upon repayment, so we recommend taking a photo of the pawn ticket as backup. The pawn ticket will include any fees, the loan term, the grace period and the final date at which you’ll be in default of your loan. Once the final date passes, the pawn shop can sell your item and they may not necessarily have to pay you back the surplus they make from selling it.
- Pay back your loan. If you repay your loan successfully, you’ll get your item back. If you fail to repay your loan, the pawn shop will sell it to collect on the loan.
What can I pawn?
Common items people pawn include:
- Jewellery and watches
- Gold, silver and diamonds
- Musical instruments
- Photography equipment
- Current electronics
Pros and cons of pawn loans
- Quick to obtain. You don’t have to go through a lengthy process to get a pawn loan. Simply take a valuable item to your local pawn shop and ask for a loan.
- No credit check. Since your loan is backed by your possession, you won’t be screened for good credit. This means your score won’t be affected by the shop doing a hard pull on your credit file.
- You can surrender your item to pay back your loan. If you default on your loan repayments, your credit score won’t be affected and you won’t be on the hook for payments. The pawn shop simply keeps your article.
- Can be relatively expensive. Finance charges and interest rates for a pawn loan typically run between 5% to 25% a month. This usually includes the storage fee for the item that you bring in.
- You may not be reimbursed for the surplus. If you don’t repay your loan on time, the pawn shop may sell your valuables. Even if they are worth more than your loan amount, the shop may not be required to reimburse you for the profits.
- Additional fees. Beyond interest charges, you may also have to pay fees for insurance, storage and more.
How does the cash for gold system work?
You’ve likely seen advertisements online or on TV about cash for gold. The process is rather simple, but you should be aware of the potential risks before you sell your old or unwanted jewellery.
- Step 1: Gather all your old jewellery. This includes your rings, necklaces, bracelets and broken pieces. You may also be able to sell non-jewellery items like gold tooth fillings or old coins if they contain gold or silver.
- Step 2: Research current market value prices. Gold and silver prices fluctuate daily, so you’ll want to know how the market is doing before you visit your local pawn shop. Make sure you’re getting the most out of selling your things.
- Step 3: Have your old jewellery appraised. If you have an unbroken set or a nice article containing other valuable materials (like pearls, gems or opals), you should visit a jeweller and have them estimate how much your items may be worth. This will help you avoid buyers who are low-balling your offer and make sure you get a good price for something valuable.
- Step 4: Visit a pawn shop or look up online buyers. Your options aren’t limited to pawn shops and online buyers, however. Many payday loan stores and cheque-cashing services also offer cash for gold. Do your research and read reviews before selling.
- Step 5: Get an offer. The buyer will give you an offer based on the bullion value and weight of your gold or silver. You can accept it then or ask for time to consider it. There’s nothing wrong with visiting multiple pawn shops and comparing offers to find the one that will get you the most cash.
- Step 6: Agree to the offer. Once you choose a shop or buyer, you can often get paid the same day for your old jewellery. Depending on what you sell, you could leave the store with a nice chunk of change in your pocket.
- Warning: There have been reports over the years of online buyers running scams. They may use the logo of a reputable dealer or simply pay fractions of a percent based on what your gold is worth. Always read reviews about cash for gold dealers and make sure the business is legitimate. Until there is a better system in place, it may be worthwhile to visit a physical store so you can be sure your valuables are safe from scam artists.
Pawn loan alternatives
Since pawn loans can be expensive, consider your other options first:
- Ask friends or family for help. You’ll likely find they are more than willing to help you out in a financial crisis. Instead of paying expensive interest charges, you may be able to get a loan for free.
- Call your bank or credit union. These lenders often offer short term loans at much better rates, however you will usually need to have a good to excellent credit score, or be a long standing customer with a good track record at the bank or credit union.
- Contact your creditors. If you need a pawn loan to cover bills that you owe, get in touch with your current creditors to ask for more time or a new repayment plan. They may be willing to work with you to extend your due date or pay off your debt in installments.
- Make extra cash in your spare time. If you have time, consider a side job to earn extra money. Car and house sharing, selling unwanted items and market research are just a few options.
- Get a short term loan. With a short term loan, also known as a payday loan, you can borrow a small amount of money and repay it fairly quickly. Unlike pawn loans, short term loans are unsecured, meaning they don’t require collateral, however they are still risky and expensive.
Short term loans to consider if you don’t want a pawn loan
Check the websites of any lenders you’re interested in to confirm they operate in your province or territory of residence.
Pawn loans can be a quick way to get extra cash, but because they can be relatively expensive, you may want to consider other options first. Before settling for a pawn shop, do your research and find a reputable and trustworthy shop.
Also, before you sell something at a pawn shop, make sure you are ready to part with your valuables. Even if you are only putting your items up as collateral, you should be aware that if you default on your repayments, your treasured possessions may be gone forever.