Should You Take a Pawnshop Loan?
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How pawnshop loans work
Borrowing from a pawnshop
Calculating APR on a pawn loan
Repaying a pawn loan
Pros and cons of pawnshop loans
Pros of pawnshop loans
- No credit check: Pawnshop loans may appeal to consumers who can’t qualify for a conventional loan, since they don’t require a credit check.
- Quick access to funds: With a pawnshop loan, you get the money right away, so you don’t have to wait for funding like a traditional personal loan.
- Failure to repay only results in losing the pawned item: There’s no legal requirement to repay a pawnshop loan, so your credit score won’t suffer if you don’t repay, nor will you be harassed by debt collectors or sued. The only consequence is losing your item.
Cons of pawnshop loans
- High cost to borrow: The biggest downside to pawning is the cost. Consumer advocates consider an APR of 36% to be the upper end of affordability for any personal loan. A pawnshop loan of $100 that costs $10 in fees and is due in 30 days has an APR of about 122%.
- May lead to repeat borrowing: About 15% of pawn loans are never repaid, according to the National Pawnbrokers Association, and repeat borrowing is common.
- Won’t solve deeper financial issues: If you find yourself extending a pawn loan, or pawning and redeeming the same item repeatedly, you may need more than this short-term financial patch.
When it may make sense to get a pawnshop loan
Alternatives to pawnshop loans

at Self
Breaking the debt cycle
Article sources
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