Pawn Transactions Explained

Why Do Consumers Use Pawnbrokers’ Services?

Pawnbrokers offer two ways for consumers to quickly exchange tangible personal property for cash thru a values based, non-recourse transaction.


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 in pawnshops. 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 state and/or local governments.


  • The consumer brings property to the pawnshop. The pawnbroker quickly appraises the merchandise and negotiates both the value of the property and the loan amount with the customer.
  • Upon agreeing on the amount(s), the pawnbroker will record information about the consumer, including identification information.
  • The pawnbroker completes a receipt with a detailed description of each piece. Often a photo is taken.
  • The receipt – called a “pawn ticket” – includes information about how much the consumer will pay to redeem (get property items back) the pawn. To redeem the pawn, the consumer pays the original amount plus pawn store charges. Along with the store charges, the ticket will include the date the consumer should return to redeem the pawn, as well as other information usually mandated by state and local laws and regulations.
  • The pawn ticket will also contain a federal Truth-in-Lending disclosure statement.
  • If the consumer is an active duty servicemember or military dependent, the pawnbroker will give an additional disclosure required by the federal Military Lending Act.
  • Any time before the last date mentioned on the pawn ticket, the consumer may redeem the pawn ticket by presenting the ticket and paying the aforementioned charges.

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 often 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 pawnshops do not report on experiences with consumers. Pawnshops 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.
  • No pawnbroker can sue any consumer to collect money they gave the consumer. Pawns are the ultimate non-recourse product.


  • State laws often cover lost pawn tickets. Some states allow a lost ticket fee.
  • Generally, a person can use their id to redeem a pawn should they lose the ticket. It’s advisable to inform the pawnbroker when a ticket is lost or misplaced because most state laws define the ticket as bailment. In most cases, the person who possesses a pawn ticket can redeem the pawn collateral.


  • Picking up pawned items is the consumer’s option.
  • To pick up property, consumers return to the pawn store with the pawn ticket and repay the money received, in addition to any 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.