Why use a pawnbroker?
A pawnbroker offers people an alternative way to borrow money.
A pawnbroker loan is a short term loan that is secured by valuables that you own so there is no credit risk involved.
A pawnbroker pays cash, so you can get an instant cash loan on the spot.
Your first pawnbroker loan: Basic scenario
When you pawn an item, the pawnbroker will make you an offer. If you accept the pawn loan amount, the pawnbroker will give you a receipt and ask you to sign a short term loan agreement (the pawnbroker must provide you with a copy of the loan agreement before you leave the pawn store). Be sure to keep the receipt in a safe place, since you will need it in order to redeem your items. If you lose the pawnbroker receipt you may be required to sign a sworn statement which says that you have lost your receipt, however, if the loan amount exceeds 25GBP, you will need to provide the pawnbroker with a statement legally sworn by a solicitor, notary public or justice of the peace.
Pawnbrokers usually provide short term loans for 6 months or less. If you need a loan for more than six months, you may return to the pawnbroker and request an extension. If the pawnbroker agrees to extend your loan, in most cases, you will be asked to sign a new agreement.You may be required to pay a portion of or all of the accrued interest. Extending your pawn loan is not recommended.
Repaying a pawnbroker loan
Once you repay the loan, plus the interest, you can redeem the pledged item(s) that you left with the pawnbroker. Interest rates on a pawnbroker loan vary and could be higher than the interest rates charged at a bank or building society. Compare interest rates before pawning your items.
Defaulting on a pawnbroker loan
If you fail to repay the loan and if the item was worth more than 25 GBP, the pawnbroker is entitled to sell your pledged item in order to recover the loan amount. If the item is sold for more than the loan amount, you are entitled to receive the balance. If the item is sold for less than the loan amount you are liable for the outstanding balance. If the loan amount was for 50 GBP or more, the pawnbroker must notify you, in writing, 14 days before selling your pawned item. The pawnbroker is also required to provide you with the sale price of your item, plus where and how it is to be sold. Once your item has been sold at auction, the pawnbroker must notify you again in writing, within 20 business days to inform you on how much they actually received for the item(s) and other costs that were involved in selling your item. If you are not satisfied with the price recovered for the pawned item, you are entitled to take legal action against the pawnbroker.