Pawn shops work by providing loans to clients in exchange for collateral. This collateral is the client’s property, and it could be anything from jewelry to sporting goods to electronics. The loans are usually small and short-term, and they come with remarkably small interest rates.
There is still interest on the loans, however; that is how pawn shops make much of their money.
When you get a loan at a pawn shop, you have a certain amount of time to pay it back with interest. The loan is usually due in 30 days, but shops can offer extensions and renewals of the loan where it is permitted by law. If the loan is not paid back in time, the pawn shop keeps the collateral and can sell it as merchandise. You can also choose to surrender the collateral voluntarily in lieu of paying the loan back in full.