What is a pawn shop loan?
One of the main services provided by your local pawnbroker is a short term secured loan. What does that mean?
A customer seeking a loan at a pawn shop will bring in a personally owned object that has some resale value to be held against a same day cash loan with a 30 day fixed term renewable contract.
- The pawn broker will establish the condition and possible resale value of the item and negotiate with the customer the desired cash loan they are seeking.
- A 30 day contract is drawn up with repayment interest and contract fees (that are provincially regulated)
- When the 30 days is up the owner of the contract will either return the borrowed sum of money with agreed upon interest and fees and regain ownership of the object or renew the contract for another 30 days. If the contract owner does not pay out the contract or does not renew it the object is claimed by the pawnbroker as collateral for the defaulted cash loan.