Compare pawn loans vs. short term loans: What you need to know

Information verified correct on April 27th, 2017

Need money to cover expenses while you’re short on cash? Don’t settle on a loan until you know the facts.

Life doesn’t always allow for perfect financial health. When you need cash to get you through to your next payday, a pawn loan or short term loan could be a viable option.

Both types of loans are fairly easy to get — they usually don’t require stringent credit checks. However, they can cost you a lot in fees and interest.

Let’s take a look at both pawn loans and short term loans so you can decide if they’re right for you.

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    Pawn loans vs. short term loans: How they work

    Pawn loans

    A pawn loan is a secured loan, meaning you put up an item of value as collateral for the loan, usually items like jewelry and electronics. The amount of the loan will vary based on state regulations and the collateral you pawn.

    The loan you’re approved for will be a percentage of the item’s value after the lender accounts for storage, security and other costs. Repayment terms are typically from 30 days to a couple of months. If you default on the loan, you risk the item being sold to cover the balance.

    Short term loans

    Short term loans are small-dollar loans offered in stores or online that must be paid off at the end of the term. For in-store loans, you typically receive your funds immediately after writing a postdated check for the amount of the loan. For online loans, you typically receive funds by bank transfer one business day after your approval. You pay back the loan via direct debit on the due date.

    For both loans, applications can take about 10 minutes online, with some lenders offering instant approval. While good credit is not a requirement, you do need to prove that you’re able to pay back the loan.

    What is collateral?

    Collateral is something you own — such as jewelry, electronics or a musical instrument — that a lender uses to secure a loan. If you default on your loan, the lender can take ownership of your collateral and even sell it.

    A selection of short term loans you can apply for

    See if any of these lenders provide loans in your state.

    Rates last updated April 27th, 2017
    Unfortunately, none of the personal loan providers have a loan for that credit score. It you are urgent need of a small loan, you might want to check out a short term loan.
    Interest Rate (p.a.) Maximum Loan Amount Term of Loan Turnaround Time
    LendUp Payday Loans
    LendUp offers $250 loans for first-time borrowers. Good credit is not required.
    From (variable) $250 7–30 days 1 business day Go to site More
    OppLoans Installment Loans
    Get a better personal loan of up to $5,000 with 9- to 24-month repayment terms, depending on your state.
    From 59% (variable) $5,000 9 to 24 months 1 business day Go to site More
    Check into Cash Payday Loan
    With 1,000 branches in 30 states, get $50 to $1,000 in days from this direct lender.
    From 260.71% (variable) $1,000 Varies by state 1–2 business days Go to site More
    CashNetUSA Loan
    Apply for a $300 to $2,250 short-term loan, installment loan or line of credit with a day’s turnaround.
    From 201.32% (variable) $2,250 Varies by state 1 business day Go to site More
    Cash Central Payday Loan
    Offers high-APR cash loans of up to 32 days deposited directly into your checking account.
    From 0% (variable) 5000 Varies by state 1–2 business days Go to site More
    ACE Cash Express Payday Loans
    An array of services in 1,000 locations include short-term, installment and title loans with terms that vary by state.
    From (variable) Varies by state Varies by state Generally receive the money the next business day Go to site More

    Have we missed anything in the comparison table? Tell us

    • If the provider quotes a different rate to the one above please let us know

    Which loan offers an easier application process?

    Pawn loans

    The application and approval process for a pawn loan is simple. First, take in an item of value to be appraised. Once the lender has determined its worth, you’ll present government-issued ID and complete any paperwork.

    Short term loans

    While pawn loans can only be done in person, short term loans are accessible online. They require you to complete basic information about yourself and provide proof of income.

    Bottom line

    Both loans offer a fairly easy application process, but only short term loans can be done both online and in person. Pawn loans don’t require proof of how you’ll repay the loan.

    Which loan offers faster turnaround?

    Pawn loans

    It takes about 10 minutes to receive a pawn loan, depending on how long the appraisal takes. There is no credit check to wait for, so once you’re given an amount and agree to the repayment terms, you can leave the store with cash in hand.

    Short term loans

    Short term loans generally take five to 10 minutes to apply for, and approval can be instant. Unlike a pawn loan, you must meet eligibility requirements that include your ability to repay the loan. You can walk out of the store with cash, whereas online your funds typically arrive in your account the next business day.

    Bottom line

    Because you’re able to walk out with money in your hands the day you apply, pawn loans can be your quickest option.

    Which loan offers better interest rates?

    Pawn loans

    The interest rates and finance charges for pawn loans are typically between 5% and 25%. If you’re unable to pay back the loan, you may be able to get an extension, if your state allows it, but loan extensions come with additional costs.

    Short term loans

    Short term loans have higher associated costs. Interest is charged in the form of fees and are usually per $100 borrowed. Some states have imposed regulations on a loan’s maximum APR allowed. In other states, you may see upward of 1,200% APR. If you fail to pay off your loan and need to refinance the remaining balance, you may pay further fees and charges. Refinancing could negatively affect your credit.

    Bottom line

    Pawn loans may offer lower rates, but these lower rates come with a risk of losing your collateral if you default on the loan.

    Which loan offers more options?

    Pawn loans

    Pawn loans don’t come with a lot of options. Any variance in a pawn loan’s amount is based on the value of what you use as collateral. This collateral is usually appraised at $150 or less. While some pawn shops may offer auto title loans, not all do.

    Short term loans

    Short term loans are typically given for small dollar amounts, usually under $1,000. However, depending on the lender they can be for larger amounts over $1,000.

    Some short term lenders even provide other loan services, such as installment loans and title loans.

    Bottom line

    Pawn loans are limited by the items used for collateral. Short term loans can offer a wider variety of loans.

    $100 to get through the next two weeks

    Reed needed to pay off an unexpected car repair. Unfortunately, he spent most of his money on groceries just before his car broke down. Luckily, Reed had a Nintendo Switch he received as a birthday gift that he could use as collateral for a pawn loan. He compared the options offered by his local pawn shop with an online short term lender.

    Pawn loanShort term loan
    Loan amount$100$100
    Loan term30 days14 days
    Finance fee$10$15
    Total due$110$115

    In this case, the pawn store loan offered a better deal for Reed. Though he would be without his Nintendo for a few weeks, he’d be able to pay back the loan early without any penalties.

    Bottom line: Which option should you pick?

    Both pawn loans and short term loans can get you cash in a pinch, but each can be filled with financial risk. And neither are long-term solutions. If you’re looking for quick cash and have something of value, a pawn loan may be faster and more cost-effective. Of course, fees will depend on the state you live in and the lender you use.

    If you’re in a cash emergency, it may be a good idea to explore different options before settling on a pawn loan or short term loan.

    8 payday loan alternatives to consider

    Frequently asked questions

    Why are interest rates high for pawn loans and short term loans?

    The loans are offered without credit checks and over a very short period of time. Lenders want to ensure they turn a decent profit on the loans.

    What are the eligibility criteria for short term loans?

    To apply for a short term loan, you should be 18 years or older, an American citizen or permanent resident and have a steady source of income. If you’re applying online, you’ll also need an operational checking account.

    How does a pawn shop determine the value of an item?

    An important factor when it comes to appraising an item is the condition it’s in. Then, depending on the item, things like age, rarity and popularity are considered.

    Where are payday loans available?

    There may be better personal finance options for you

    Short term loans and pawn loans can be helpful in an emergency, but they may not fit your needs.

    Personal lending options to help you on your way to financial bliss

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    US Payday Loans Offers

    Learn about our information service
    Check into Cash Payday Loan

    With 1,000 branches in 30 states, get $50 to $1,000 in days from this direct lender.

    LendUp Payday Loans

    LendUp offers $250 loans for first-time borrowers. Good credit is not required.

    SWIFT Payday Loan

    Access multiple lenders with a 5-minute application for a cash advance on your paycheck.

    CashNetUSA Loan

    Apply for a $300 to $2,250 short-term loan, installment loan or line of credit with a day’s turnaround.