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23 May

Explore The Most Common Misconceptions & Myths About Pawnbroking

What’s the first thought that comes to your mind when you hear the word ‘Pawnbroking’? Let’s guess – old and dusty shops tucked away in the dimly lit alleys of cityscapes, is it? Pawnbrokers have long been enveloped in mystery, with many making incorrect assumptions about how the pawn loan works and what the industry is actually like, especially in the UK. 

Although pawnbrokers and Pawnbroking have been around for thousands of years, not many understand what it’s all about, giving space to misconceptions. However, the reality paints quite a different picture. 

In reality, Pawnbroking is the oldest form of lending money, providing quick cash to individuals in urgent financial need. The services are legitimate and fully regulated, ensuring your financial security.

However, despite their usefulness, several myths and misconceptions surround Pawnbroking. So, it’s time we set the record straight! 

11 Most Common Misconceptions & Myths About Pawnbroking

1. You Never Get Your Items Back

One commonly held notion is that people who pawn their valuables lose their treasured possessions. On the contrary, approximately 85% of the customers who pawn their valuables with pawnbrokers get their items back at the end of the loan period. This is because the rest of the people could not fully repay their loans within the agreed time. 

If you repay your loan on time, the pawnbroker will facilitate the return of your items. In fact, if you pay your loan back early, your items will be returned early. Pawnbrokers always state the loan terms before you sign the contract. You might only increase the chances of losing your item when you cannot repay the loan and redeem your item. However, pawnbrokers often allow customers to renew or extend their loan term, ensuring a fair process. 

2. Pawnbrokers Aim To Make Profit By Retaining Your Item

It’s often thought that pawnbrokers try to separate people from their pawned possessions so they can keep them or sell them to earn profit. But the truth is pawnbrokers don’t operate this way. They want customers to repay the loan with interest and take their items back because keeping the stuff is actually not profitable for them. 

The pawnbroker’s goal is to profit from the loan they offer rather than selling the pawned items. For this reason, customers are generally offered the option to renew or extend their loan term. If someone doesn’t return the loan, the pawnbroker calls them multiple times before selling the item. 

3. They Are Unregulated & Unfair

The pawnbroking industry is strictly regulated, and just like banks, pawnbrokers must be fully authorised. In the UK, all pawnbrokers are regulated by the Financial Conduct Authority, and they sign up to the Anti Money Laundering register before they trade. But it’s not just about regulations; it’s about providing a fair and respectful service to the borrowers. Several industry-specific procedures are followed at every level to ensure this. Additionally, the National Pawnbrokers Association offers further support and resources to help protect customers and keep the business running smoothly. 

Unfortunately, if you’re being ripped off in any unlikely event, you can complain to the Financial Ombudsman Service. But it’s reassuring to know that over 95% of the people who have availed pawnbroking services have encountered no problem. 

4. Pawnbroking Is Expensive

Getting the wrong idea about pawnbrokers charging outrageous loan interest is easy. This is because the interest rate is shown as an Annual percentage (the amount due over a year). Pawn loans are usually given for six months or shorter durations, which means the annual rate makes the loan interest appear more expensive than it actually is. Therefore, it’s best to check out the monthly interest rates to get a better idea. 

5. Pawnbroking Is The Last Resort For A Loan

A lot of people think that the only people who use pawnbroking services are either desperate or those left with no other option. The reality is that most customers use pawnbroking services for convenience. Long ago, pawn loans were seen as the â€˜last resort’ credit type because credit checks are not necessary in this system. However, as banks became stricter and people needed more flexible ways to get loans, pawnbrokers came to be seen as a convenient and safe short-term credit option. 

So, people who take pawn loans from pawnbrokers today are not desperate or out of options, but because the former’s services drive people to seek this credit type. There’s no lengthy application process, and you don’t have to wait to borrow money during unexpected emergencies. 

6. Pawnbrokers Offer Small Amounts of Cash

The amount you borrow from a pawnbroker absolutely depends on the value of the item you wish to pawn. Therefore, you can borrow thousands if you have items of that worth. It is not just luxury watches and jewellery; you can pawn any item of value, including bags, antiques, and art. Your financial history or credit score does not influence the pawn loan amount you borrow. 

Pawnbrokers aim to provide customers with the best possible offer for their items, taking into account various factors like the market value, condition and age of the item. However, one must be able to repay the loan amount in full. So, even if you can borrow a large sum of money, you must always check to see if you can repay it on time.

7. Pawnbroking service is for low-income individuals only

Pawnbroking often evokes images of financially struggling customers who pawn their items as a last resort to borrow some cash. For this reason, many look down upon using pawnbroking services as something to be ashamed of. Most people who choose a pawnbroker have steady employment and a steady income. As pawnbrokers have become more visible as legitimate and professional credit options, people from all walks of life use their services to meet short-term cash needs.

 Many affluent customers use pawnbroking services for quick cash transactions or to leverage the value of their treasured assets without selling them outright. The funds can be used as an alternate investment to pay for a special occasion or start a new business venture. It’s simply the most efficient and convenient option for customers, and more people realise that every year. 

8. Pawnbrokers Sell Outdated & Stolen Items

One of the most permanent and prominent myths about pawnbrokers is that they sell stolen goods. Pawnbrokers are lenders as well as they sell a wide range of desirable items to attract customers and make sales. Therefore, it only makes sense that no pawnbroker will ever stock their inventory with unwanted, outdated and stolen items that no one wants to buy! Unlike what most people think, not all items sold by pawnbrokers come from failed pawn loans. Most items put on sale have been sourced exclusively by professionals to cater to all tastes. 

Also, pawnbrokers must adhere to state, local and federal regulations. So, the last thing they’d want is to sell stolen items. The seller must provide their valid ID and personal details when they sell items to the pawnbroker. Additionally, the pawnbrokers conduct a meticulous verification process to guarantee the legitimacy of all items. 

9. They Are Obsolete & Irrelevant In The Digital Age

The rise of the digital age has led some to believe that traditional pawnbrokers are becoming irrelevant and obsolete. On the contrary, pawnbrokers are adapting to changing consumer preferences and leveraging online platforms, social media, and other modern strategies to reach a broader audience base and improve convenience further. 

Many reputable and well-established pawnbrokers in the UK carry their business in-store and over the web simultaneously. For instance, Luxbrokers gives customers the benefit of online and physical presence, allowing them to easily connect with local customers and those residing far away. 

10. Pawnbrokers Are Unwelcoming

Many people hesitate to visit a pawnbroker, and some might go as far as believing that they lower the tone of a neighbourhood. Well, do you think negatively of a bank near your house? If not, then pawnbrokers are not dissimilar to banks. Far from being dark, unwelcoming and shady, most pawnbrokers operate from well-lit and well-maintained stores that are usually part of reputable establishments. They create a positive, professional and trustworthy environment for customers to feel safe and confident when dealing with them. 

Want to see for yourself? Visit Luxbrokers at Hatton Garden, London, to buy, sell and pawn items. 

11. Pawnbroker Appraisals Lack Transparency

A very prevalent misconception is that pawnbrokers are not transparent about appraisals. In reality, a reputable pawnbroker is always transparent about the factors affecting the appraisal. They conduct meticulous inspections and consider the item’s condition, age, rarity, market demand and other relevant factors before making an offer. They are also willing to explain how they arrived at a certain value to help customers feel at ease and make an informed decision. 


Pawnbroking is often shrouded in myths and misconceptions, but understanding the realities can help demystify this age-old practice. By debunking these common myths, we hope to shed light on the true nature of Pawnbroking and encourage a more informed perspective. 

Whether you need a quick loan or are curious about the industry, knowing the facts can help you make more informed decisions and appreciate pawnbrokers’ valuable role in our financial ecosystem.

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