How a Pawn Loan Works – And Why It May Make Sense For You

September 9, 2011 – 6:00 pm

In today’s economy, many people are struggling to make ends meet or make some extra money where they can. One option that has increased in popularity is to sell valuable jewelry or coins at a pawn shop. But what if you don’t want to part permanently with your cherished belongings? A pawn loan may be the answer. Before you enter into a loan agreement with a pawn shop, make sure you do your homework regarding the shop, and understand how the loan works. Here’s an overview.

How a Pawn Loan Works

While terms and conditions between pawn shops and jewelry stores may differ, a pawn loan generally works like this: when you bring in a piece of jewelry or other item to the pawn shop, the property is appraised by a professional appraiser. The appraiser then gives you a price for your item, the interest rate on the loan and other terms and conditions of the loan.

If you agree to the price, terms and conditions, you will receive cash in the amount of the agreed upon loan. The item then becomes collateral against the loan. Pawn shops vary, but most pawn loans are two or three months.

Once you repay the loan in full, including interest, you receive your property back. If you do not repay the loan within the time set forth in the terms, the collateral then becomes the property of the pawn shop. If you cannot repay the loan, you may surrender your loaned item as payment in full or apply for a loan extension or renewal.

Loan Extensions and Renewals

Many pawn shops offer extension and/or renewal periods. With an extension, you may extend the length of your loan, as allowed by state law. Most pawn shops will require you to pay a portion of the interest owed.

Another option is a loan renewal. You pay the accrued interest on the loan, and a new loan is written. The original (principal) amount of the loan and the interest rate stay the same, but the due date of the loan is reset to the beginning.

Benefits of a Pawn Loan

Many people feel a sentimental attachment to a piece of jewelry. They may want to keep it as an investment or bequeath it to their children. A pawn loan is a quick and easy alternative to selling. You also do not have to qualify for the loan or go through a credit check like you would with a traditional bank loan. The amount you receive is based on the appraised value of your piece-not your credit rating or other variable. It’s common knowledge that banks have tightened their lending standards over the last few years, so, for many, a pawn loan is a viable option to a traditional loan.

What to Know Before You Pawn

Before agreeing to a pawn shop loan, do your research. Is the pawn or jewelry store reputable? Can you talk to or read testimonials from satisfied customers?

Make sure the pawn shop is licensed and regulated by the state and/or local authorities. Also ask if the pawn shop is insured and your item will be locked up and safe. Before you get your item appraised, be sure the appraiser is properly trained and experienced. Finally, make sure you understand how the appraiser determined the appraisal value of the item and all the terms and conditions of the loan.

When you bring in a piece of jewelry or other item to Empire, that property is appraised by a professional jeweler. If you choose to take a loan out or “pawn it” instead of sell it, the item becomes collateral against the loan, and you receive cash against that collateral.

Empire offers cash at high value for the item, very competitive loan rates, and you will not be put through a credit check. The item is stored our state-of-the-art vault for safe keeping throughout the time of the loan. Above a $250 value, the item is stored securely in a bank vault. Once it is repaid, you’ll receive your property back in pristine condition.

For more information on getting a loan on your specific gold, jewelry or other item, go to our selling section.

Have a question for us? Call us today at (516) 520-5252 or visit for more information.

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