pawnshop

A pawnshop is a retail business that offers short-term secured loans to individuals who pledge personal property as collateral. The borrower receives cash or a loan against the appraised value of the item, and the collateral is held by the pawnbroker until the loan is repaid with interest and fees. If the loan is not repaid within the agreed term, the pawnbroker may sell or dispose of the collateral. Some pawnshops also buy items outright or resell them.

Typically, customers bring items such as jewelry, electronics, musical instruments, cameras, tools, or other valuables for appraisal. The loan amount is usually a fraction of the item's resale value and depends on its condition and demand. Loans are commonly short-term, with interest and fees set by local laws or shop policies. Extensions or rollovers may be available in some cases. Redemption requires paying the loan principal plus interest and any applicable fees within the term; failure to redeem can lead to sale of the item.

In addition to lending, pawnshops function as second-hand retailers, selling goods that are not redeemed or purchased outright. Some shops offer appraisal, minor repairs, or cleaning before resale. They may also handle a variety of goods with differing legal requirements, such as firearms in jurisdictions that permit such transactions.

Regulation of pawnshops varies by country and region. Licensing, consumer protection, and usury laws govern terms, disclosure, recordkeeping, and the right of redemption. Compliance requirements often address storage, security, and reporting of transactions to prevent fraud or money laundering.

Historically, pawnbroking dates to ancient times, with modern pawnshops multiplying in the 19th and 20th centuries. They provide liquidity and access to credit for individuals who may not qualify for traditional loans, though terms can be costly compared with standard financial products.