A pawn loan is a type of short-term secured personal loan<\/a>. An item of value is held as collateral by the lender, known as a pawnbroker, until the borrower repays the loan in full, including interest.<\/p>\n\n\n\n The pawnbroker will appraise the item you wish to pawn based on its condition, age and current market value. The broker will keep the item and will then extend a loan to the borrower for a portion of that market value.<\/p>\n\n\n\n Pawn loans have short terms, usually 30-days. You must repay the loan in full by the end of that term, plus fees and interest, in order to reclaim the item.<\/p>\n\n\n\n Interest on pawn loans is usually between 5% and 30%, split between a storage fee and an interest rate. Borrowers may also have the option to extend their loan for 30 additional days, but this also leads to higher interest costs.<\/p>\n\n\n\n If the borrower doesn\u2019t pay back the amount borrowed or return to collect their item, it becomes the property of the lender.<\/p>\n\n\n\n Typically, items used as collateral for a pawn loan include:<\/p>\n\n\n\n Pawnbrokers will typically lend between 20 to 60% of the appraised value of an item. You may pay interest and fees on top of the loan principal.<\/p>\n\n\n\n Let\u2019s say, a pawnbroker values your laptop at $400. You might receive a pawn loan of $120 (30% of the value of the item) for 30 days. If the broker charges an additional 5% interest rate and 25% storage fee, you\u2019ll need to repay $156 at the end of the month to reclaim the laptop.<\/p>\n\n\n\n Nerd tip:<\/strong> According to the Canadian Pawn Association<\/a>, a professional trade organization for the pawnbroking industry, the average amount Canadians borrow via a 30-day pawn loan is $150.<\/p>\n\n\n\n For some borrowers in need of a small amount of cash for the short term, a pawn loan may provide a temporary solution. But these loans also come with several downsides that are important to note: <\/p>\n\n\n\n With the high price the lender will charge you to retrieve your collateral and the risk of losing the item if you fail to pay, it is worth considering other options before agreeing to a pawn loan, including:<\/p>\n\n\n\n Personal loan or line of credit: <\/strong>An unsecured personal loan<\/a> or line of credit provided by a bank or credit union is one way to access emergency funds at a lower interest rate than a pawn loan, and doesn’t require collateral. You may need to meet minimum credit score requirements, however.<\/p>\n\n\n\n Higher credit card limit or cash advance: <\/strong>For Canadians with a credit card, requesting a higher limit from your provider<\/a> may provide a temporary solution to cash flow concerns. <\/p>\n\n\n\n Cash advance. <\/strong>Taking out a cash advance from your credit card<\/a> to cover an emergency expense will come with a fee and an APR that is higher than your credit card APR, but it will likely be lower than the annual interest you\u2019ll pay for a pawn loan.<\/p>\n\n\n\n Overdraft protection: <\/strong>For emergency cash flow needs, you may be able to add overdraft protection<\/a> to your chequing account with your financial institution, which will allow you to carry a negative balance for a short period of time without penalty.<\/p>\n\n\n\n No. Pawnbrokers offer loans using physical items as collateral. Payday loans use your future expected income as collateral.<\/p>\n<\/div><\/div><\/div>\n\n\n\n Pawn loan interest rates depend on factors like the amount borrowed and provincial regulations. Rates differ by lender but are generally made up of an interest rate and a storage fee.<\/p>\n<\/div><\/div><\/div>\n<\/div><\/div><\/div>\n<\/div><\/div><\/div>\n\n\n\n Helen Burnett-Nichols is a freelance writer specializing in news and feature articles on a variety of business, legal and investment topics. Her work has appeared in publications such as The…<\/p>\n\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\tRead more about Helen Burnett-Nichols and explore their articles<\/span>\n\t\t\t\t\t\t<\/a>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t\t<\/div>\n<\/div>\n\n\n\n\t To get a personal loan in Canada, you’ll have to meet common requirements around age, residency, income, and credit score.<\/p>\n\t<\/div>\n\n\t A cash advance is a short-term financing option with very high interest rates, while a personal loan is a longer-term financing option with lower rates.<\/p>\n\t<\/div>\n\n\t Personal loans for bad credit are typically offered by alternative lenders, and have higher interest rates and additional fees.<\/p>\n\t<\/div>\n\n\tPawn loan interest rates<\/h3>\n\n\n\n
What you can pawn<\/h3>\n\n\n\n
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How much money can you get with a pawn loan?<\/strong><\/h3>\n\n\n\n
Pros and cons of pawn loans<\/strong><\/h2>\n\n\n\n
Pros<\/h4>
Cons<\/h4>
Pawn loan alternatives<\/strong><\/h2>\n\n\n\n
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Frequently asked questions about pawn loans<\/h3><\/div>
\n\t\t\tAbout the Author\t\t<\/h4>\n\n\t\t\t\t\t
\n\t\t\t\tDIVE EVEN DEEPER\t\t\t<\/h4>\n\t\t\n\t\t
![\"How](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2023\/02\/GettyImages-1028679822-435x290.jpg\")
\t<\/a>\n\t\t\t\n\t\n\t\tHow Do I Get a Personal Loan? Cost, Eligibility and Credit Score\t<\/a>\n<\/h4>\n\n\t
![\"\"](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2021\/07\/Hannah-Logan-e1626212867388-40x40.jpg\")
Hannah Logan<\/a>\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n<\/div>![\"Cash](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2023\/03\/GettyImages-1405265686-434x290.jpg\")
\t<\/a>\n\t\t\t\n\t\n\t\tCash Advance vs Personal Loan: How to Choose\t<\/a>\n<\/h4>\n\n\t
![\"\"](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2021\/07\/Sandra-MacGregor-e1626212852416-40x40.jpg\")
Sandra MacGregor<\/a>\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t<\/div>\n\t\t<\/div>\n\t<\/div>\n<\/div>\n<\/div>![\"Can](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2023\/03\/GettyImages-157378189-435x290.jpg\")
\t<\/a>\n\t\t\t\n\t\n\t\tCan I Get a Personal Loan with Bad Credit?\t<\/a>\n<\/h4>\n\n\t
![\"Personal](\"https:\/\/www.nerdwallet.com\/ca\/wp-content\/uploads\/sites\/2\/2023\/02\/GettyImages-1155347271-460x259.jpg\")
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