Pawn Transactions Explained

Why Do Consumers Use Pawnbrokers’ Services?

Traditional pawn transactions

The pawnbroker and consumer negotiate the value of merchandise. The pawnbroker is required to store and insure consumers’ pawn collateral while it is in their possession. Consumers choose whether to redeem the property or leave it.


Purchase transactions

The pawnbroker buys used goods outright. These are true sales, not collateral-based transactions. Consumers normally get more for tangible property they sell outright than in traditional pawn transactions.

Here's How it Works

Most states regulate both traditional pawn transactions and purchase transactions. Some local governments also set terms and conditions for pawns and purchases. Here are the features of pawns common in all states where pawns are regulated by the state or local governments.


  • A consumer brings one or more personal property item to the pawn store. The pawnbroker quickly appraises the merchandise and negotiates both the value of the property and the loan amount with the customer. 
  • The pawnbroker records information about the consumer, including identification information.
  • The pawnbroker completes a receipt, called a “pawn ticket,”  with a detailed description of the item(s) and sometimes a photo of each item.  
  • The pawn ticket includes information about how much the consumer will pay to get property item(s) back, including pawn store charges, and the date the consumer should return to pick up their item. 
  • The pawn ticket will contain a federal Truth-in-Lending disclosure statement. 
  • If the consumer is an active duty servicemember or a military dependent, the pawnbroker will give an additional disclosure required by the federal Military Lending Act.

All About Pawn

You can get funds from a licensed pawnbroker by taking your item to the store where a dollar amount offered is based on the value of the item, not your credit record.


You can pick up your item within the law-allowed time period by paying the money you received, plus the specified interest and any service fees.

A pawn transaction amount is entirely

based on the value of your item. There

is no credit check, proof of employment

or income required.

Pawning is an easy and fast safety-net

option to quickly get the money you

need without penalty. It is private

between you and the pawn shop.


Most frequent questions and answers


  • Pawn stores provide a fast and easy way to get cash. 
  • Pawn stores are located close to home or work and are open more days and hours than most banks or credit unions.
  • Pawns do not affect consumers’ credit ratings. Consumer credit reports are not utilized in pawn transactions and pawn stores do not report on experiences with consumers.. They also do not require proof of employment or income.
  • A pawn is non-recourse. If the customer decides not to return for the property, there are no negative repercussions.
  • Pawns are the ultimate non-recourse product. No pawnbroker can sue a consumer to collect the money they gave the consumer.


  • Picking up pawned items is the consumer’s choice. 
  • To retrieve their property, the consumer goes back to the pawn store with their pawn ticket and repays the money originally received, in addition to the accrued charges. 
  • If the ticket expires, ownership of the property passes to the pawnbroker.

Traditional pawnbrokers do not make “buy-sell” agreements. This kind of agreement, one in which someone sells an item with an agreed upon price and time to repurchase the item, is illegal in most states.