Pawnbrokers will loan you money, but you have to leave something valuable behind as security; this is called a ‘pawn’. Popular pawns include jewellery, mobile phones, games consoles and other electrical items. If you do not repay your loan by the deadline, then you risk losing your item.
Pawnbrokers can be used when you need to borrow money quickly but they often charge high interest rates compared to loans from other finance companies, such as banks or building societies.
You will be able to get your item back once you repay your loan plus the interest. If you fail to meet your deadline, the pawnbroker will sell your item on to raise money to repay your loan.
When you take out a loan from a pawnbroker, they will give you a ‘pawn receipt’ for the item you leave as security and it is very important that you keep this receipt safe because it proves the item is yours. If you lose your receipt, the pawnbroker can legally refuse to give the item back to you.
The pawnbroker will also ask you to sign a credit agreement before lending you money and the credit agreement should state the interest rate you will be charged and when you have to repay your loan.
Baines and Ernst Ltd