empenos

Empenos is a Spanish word that translates to "pledges" or "pawned items" in English. It refers to the practice of using personal possessions as collateral to obtain a short-term loan. This is a common form of lending in many Latin American countries and also exists in various forms worldwide.

The process typically involves taking an item of value, such as jewelry, electronics, or tools, to a pawn shop or a specialized empeno institution. An appraiser then assesses the item's worth and offers a loan amount based on a percentage of that value. The borrower receives the cash, and the item is held by the institution as security. The borrower is given a contract that outlines the loan amount, interest rate, and the repayment period.

If the borrower repays the loan within the agreed-upon timeframe, with the accumulated interest, they can reclaim their pawned item. However, if the borrower fails to repay the loan, the institution has the right to sell the item to recoup their losses. This practice can be a quick way to access funds for individuals who may not qualify for traditional bank loans, but it also carries the risk of losing valuable possessions if repayment is not met.