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 shop 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.
Can you get a loan from a pawn shop?
Yes, some pawn shops offer loans typically of around $150 or less – although some offer up to $10,000 or more – in exchange for a valuable item you give them as collateral. You get your item back once you pay back the loan with interest. But if you default on the loan, the pawn shop will keep or sell the item to recoup its losses. Pawn shop loans charge interest varying from as low as 5% to higher than 200%.
Like all loans, it’s important to know the due date and pay on time. If you do, a pawn shop loan is a quick and simple way to get cash without worrying about strict qualification requirements.
How to get pawn shop loans in 5 steps
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 20% and 60% of the resale value. So if you have a piece of jewellery worth $1,000, the pawn shop might offer you a loan for $200-$600. 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. Pawn shop loan interest rates can often fall between 5% and 30% of the loan’s value on top of the loan. So, for example, if you borrow $100 you could end up paying back a total of $130.
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 collateral can I use to get a pawn shop loan?
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.
Cons
Can be relatively expensive. Finance charges and interest rates for a pawn loan typically run between 5% to 30% 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.
Be aware of gold dealer scams: 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 shop 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 payday loan. With a payday loan you can borrow a small amount of money and repay it fairly quickly. Unlike pawn shop loans, payday loans are unsecured, meaning they don’t require collateral, however they are still risky and expensive. Compare your payday loan options in the table below.
⚠️ Warning: Be cautious with payday loans
High-cost payday loans are unsustainable for borrowing over a continued period of time and are expensive as a means of longer-term borrowing. View payday costs and regulations by province here. If you're experiencing financial hardship call Credit Counselling Canada for free financial counselling (Monday-Friday 8:00am-5:00pm at +1 866-398-5999). You may also want to consider payday loan alternatives.
Payday loans to consider if you don’t want a pawn loan
1 - 4 of 4
Maximum borrowing costs of payday loans per province
Always refer to your contract for exact repayment amounts and costs.
Province
Max. cost of borrowing a $100 payday loan
Cooling off period to cancel loan
Max. penalty for returned cheque or pre-authorized debit
Alberta
$15
2 business days
$25
British Columbia
$15
2 business days
$20
Manitoba
$17
48 hours excluding Sundays and holidays
$20
New Brunswick
$15
48 hours excluding Sundays and holidays
$20
Newfoundland and Labrador
$14
2 business days
$20
Nova Scotia
$15
Next business day (2 days for online loans)
$40 (default penalty)
Ontario
$15
2 business days
$25
Prince Edward Island
$15
2 business days
N/A
Quebec
Limit of 35% AIR
N/A
N/A
Saskatchewan
$17
Next business day
$25
Bottom line
Pawn loans can be a quick way to get extra cash, but because high interest rates make them 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.
Frequently asked questions on pawn shop loans
You can get a pawn loan very quickly. Just take something valuable to a pawn shop and you can walk out with a loan in minutes.
The value of your item depends on factors like the item’s condition and how easily the pawn shop can sell it. Overall, pawn brokers want to be sure they can liquidate your collateral if you fail to repay your loan.
Like payday loans, pawn loans are extended for a short period of time. Pawn shops want to ensure they’ll make a decent return on the loans they offer, so charging high interest rates is a way for them to accomplish this.
Most likely, yes. Many pawn shops allow you to renew a pawn loan by paying the lending fee from the first loan. The loan typically begins again for the same amount of time with the same terms and conditions.
Kevin Chen is a personal finance expert and a former writer at Finder. His expertise has been featured in CNN, U.S. News and World Report, Lifehacker and CreditCards.com, among other top media.
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