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21 May

A Complete Guide To How Pawnbrokers Operate 

If any unexpected expense or¬†financial crisis arises and you need to get money fast,¬†you’ll¬†no doubt look for a loan. However, securing traditional forms of credit from banks can sometimes be difficult for various reasons, like bad credit scores. Pawning your assets to a reliable pawnbroker may be the best option¬†in such cases.¬†

We understand that some may be apprehensive about the legitimacy of pawnbrokers, given the confusion surrounding their operations. However, once you understand the straightforward and transparent process, you’ll realise how easy it is to navigate. 

Here, we have outlined everything you need to know about pawnbrokers, pawnbroking services and how pawnbrokers work.¬†We’ll¬†also discuss the advantages of pawnbroking to help you decide whether it is the best choice for you or not.¬†Let’s¬†get into it.

What is a Pawnbroker?

Pawnbroking is a highly regulated and respected method of generating short-term loans. A reputable pawnbroker is regulated by the National Pawnbrokers’ Association (NPA), a professional trade association that sets a code of conduct for its members. The NPA ensures its members operate ethically and transparently, providing their customers a safe and fair service. 

A pawnbroker is a loan provider that offers short-term secured loans against your valuables. Valuables can cover an enormous range of items, from high-end watches to jewellery, gold, diamonds, art, and many other collectables. 

The pawnbroker holds your asset as security for the loan, which you can redeem once you repay the total loan amount. The item (s) are stored in highly secured places while in their possession. 

Who can get a Pawn Loan?

Anyone who needs quick money for a short term but has a poor credit score or financial history can seek a pawnbroking loan. However, you must be the legal owner of these items. 

How do Pawnbrokers Operate?

Pawnbrokers lend money against your personal property like watches, jewellery, gold, etc. The process is carried out either online or in-store, depending on the particular pawnbroker. However, irrespective of the method you choose to pawn your item, this is how the process works:

1. You take your item of value to a pawnbroker. The pawnbroker will value your asset and make an offer based on it. The amount they offer is based on the¬†item’s¬†current value, condition, and other factors. A professional evaluates your item, so you can rest assured that the valuation will be fair and accurate.

2. You can accept, reject or negotiate the offer.¬†It’s¬†important to note that the pawn offer may not be as high as the¬†item’s¬†value, as the pawnbroker needs to include the storage charge and some extra to compensate for the risk of loan default.¬†

3. If you accept the offer, the asset is called a pledge, as it becomes collateral for the loan. 

4. The pawnbroker will lend you¬†a fixed sum¬†of money¬†for a set period at a¬†certain¬†interest rate. The interest depends on the loan amount; the higher the amount, the lower the interest charged. Depending on the pawnbroker,¬†you’ll¬†be quoted a monthly or daily interest rate. You will also be shown the APR (Annual Percentage Rate).¬†

5. If you agree,¬†you’ll¬†be given a credit agreement to sign. The signed contract includes details of your arrangement. For instance, it mentions the interest you must pay, the loan period, the repayment date, and other terms and conditions.¬†

6. While pawnbrokers do not conduct credit checks, they will require an ID to confirm your identity. 

7. When all is said and done, the pawnbroker keeps the asset in storage until the loan is repaid. Aim for a realistic loan repayment plan so you can feel confident that you will easily repay the loan amount in full. 

8. For the pawnbroker to return your item,¬†you’ll¬†have to repay the total loan amount and the outstanding interest, and your item will be returned.¬†

9. If you fail to repay the loan for any reason, the pawnbroker will attempt to sell your item to recover the amount you borrowed plus the interest. If the item sells for more, the extra money should be given to you.

It’s¬†important to¬†note¬†that not all pawnbrokers operate¬†in the same way. Many offer flexible options such as early retrieval or loan term extensions, demonstrating their understanding and support when¬†you face difficulty repaying the loan. Therefore,¬†it’s¬†advisable to have a conversation with the professionals to explore these options.¬†

How do online pawnbrokers work?

Online pawnbroking allows you to apply for loans from anywhere without visiting a physical store. It is a quick service and offers a simple and discreet way of obtaining a guaranteed short-term secured loan from the comfort of your home or anywhere else. 

Online pawnbroking is as safe as in-store pawnbroking. It is only important to choose a reliable pawnbroker. The quicker you send your assets, the quicker you’ll receive the loan.  

This is how the online pawnbroking process works: 

1. Submit your loan application online, providing all the necessary details, including the¬†asset’s¬†description and high-quality images.

2. Receive an initial offer. Lenders usually give an indicative loan offer, so you know how much to expect for the item you wish to pawn.

3. If you wish to proceed, you¬†have to¬†courier your asset to the pawnbrokers for final evaluation. A reputed pawnbroker offers a tracked and insured courier service.¬†This¬†means that your item is fully insured against loss or damage during transit, and you can track its journey from your doorstep to the¬†pawnbroker’s¬†location.¬†

4. Once the pawnbroker receives your item, they¬†fully¬†inspect and value it in person to give you a final loan offer. They evaluate the¬†item’s¬†condition, market value, and demand to¬†give you¬†the best offer.¬†For instance, a rare collectable in good condition may fetch a higher loan amount than a¬†common¬†item in poor condition.¬†This¬†ensures that you get a fair loan offer based on the¬†true¬†value of your item.

5. If you accept the final loan offer, they will email you the loan contract and ask for your ID and bank details so you can transfer the funds immediately.

6. In case you wish to withdraw from the transaction, the pawnbrokers will post your item back to you promptly, fully insured in the same way.  

Advantages of Pawnbroking

Today, more and more people are turning to pawnbrokers to secure fast cash. This is because of the multitude of benefits offered by pawnbroking services. They are:

  • Quick Service

Unexpected expenses, a sudden drop in income or unplanned bills, pawnbrokers are saviours when you need cash fast. Get same-day cash loans, often within minutes, using your assets as collateral. There is minimal paperwork, and you won’t be asked to provide much information. 

  • Hassle-free

Many pawnbrokers offer safe and secure online pawnbroking loans, allowing you to pawn from the comfort of your home to maintain privacy. Simply fill in the details online, and the professionals will do the rest for you. 

  • No Credit Checks

A pawn loan is purely based on the value of the item you’ve chosen to pawn. This means no matter your income or credit history, you’ll be able to pawn your item, making it much more accessible than other forms of loan. More significantly, failing to repay the loan will not affect your credit score either. 

  • No Long-Term Commitment

A temporary cash problem requires a short-term solution, but conventional loans, like bank loans, take years to complete. A pawnbroking loan is a short-term secured loan against your valuables. It is usually six to seven months long, and you can easily retrieve your item once the loan is repaid. Moreover, you also have the option to make a payment anytime and get your item back. 

  • Retain ownership of your¬†item

A pawnbroking loan is a great way to utilise the value of your valuables without selling them. You retain ownership of your item while efficiently meeting your short-term cash needs. 

  • Get Multiple Loans

Unlike traditional money-lending institutions like banks, you can pawn more than one item at a time as per your need. Also, you can use the same item as collateral as many times as you want. Borrow a small or large amount of money depending on your needs. 

  • Low Interest Rates

Compared to other forms of loans, the interest rates of secured loans are often cheaper. This is because secured loans give pawnbrokers extra protection, as they always have the option to seize your item if you fail to repay the loan. As a result, the interest rates tend to be significantly lower than unsecured loans. 


Contrary to what many may think, pawnbrokers offer their customers a clean and friendly environment to secure loans. They are regulated businesses providing credible alternatives to mainstream ways of borrowing if your credit score or financial history isn’t the strongest or you need instant money. 

However, always do your research before deciding to pawn your item. If ever in doubt, get in touch with professionals. And if you think pawning is the best solution for you, Luxbrokers, a renowned pawnbroker in London with over 40 years of combined experience, will offer an instant cash loan against luxury watches and jewellery. Apply online for a free instant valuation for your item, or book an appointment to visit us with your asset at our Hatton Garden store. 

Call 0207 123 5081 for more details. 

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