How Pawn Shops Work

This article will explore how pawn shops work – specifically ours.
Pawning is the safest and quickest way to get some cash fast.
The word pawn is¬†synonymous with “a collateral loan”.

What is a Pawn?

It isn’t easy to understand how pawn shops work, so stay with me.

A pawn is when you give us something of value in exchange for money. You must be at least 18 years old to legally pawn an item. The money we loan to you accrues interest at the rate of 10% at the start of every thirty day period. According to Kansas law, you have 90 days to pay at least thirty days of interest. As long as you maintain only 90 days of back interest on your item, we will hold the item for you indefinitely. If, however, there is a time in which you cannot keep the interest owed on your item under 90 days, then we have the ability to “pull” your item and take ownership of it.

At any point in time you can pay the interest owed as well as the original amount loaned and get your pawned item back.

Also, at any point, you can pay off the interest owed and pay down the principle on your pawn.

If you default, we simply take legal ownership of the item. This will not effect your credit score, won’t be a legal issue, and you will no longer owe us any money for this pawn.

Your Expectation

So let us pretend you need some fast cash and you come to our shop with an item of value. The first thing our pawnbrokers are going to do is discover how much money you are hoping to borrow or pawn. This is an important starting point to the discussion. We do this all the time, and it is important that we find out if your expectation is realistic considering the item you have. Further, many people bring in items of great value – but only need a fraction of what its worth on a pawn. Remember – the more you borrow the more interest you pay on your pawn.

Once we discover if your dollar expectation is a general area that we think we can get close to, we move to the next step of the pawn process.


As pawnbrokers, we use a variety of online tools and membership sites to determine the used market value and demand of the exact item you have – including it’s condition. If something cannot be found on the used market, one of our team members will do their own research and use their knowledge of the market and how well we think we could sell it (if you happened to default) to determine a fair amount to loan to you.

Once we determine a price that we think is fair based on our research – we make you an offer. We try and make our offers fair from the start, it isn’t fair or honest to you for us to attempt to lowball you and then negotiate because then you never know if you got a fair price. This means that normally our first offer is our best and final offer.

Once we agree on the amount of the loan for the item based on your need and our research – we move to the next step.


Our offer of course assumes that the item works properly and that all the necessary attachments are there. At this stage of the pawning process, we thoroughly test your item to make sure it is working properly. If the item fails our testing, we won’t loan money on it. If it passes – we move to the next step.

The Loan and How it Works

After putting the item in our system, getting your information from a valid license or photo ID, and getting the paperwork all printed, you sign your pawn slip and we give you the cash. You keep a copy of your pawn slip – which is the legal ownership of your item. It’s important to note that anyone can redeem your item with your pawn slip, so keep it safe.

Lets pretend you get a $100 dollar loan on a laptop.

At the time of you signing the pawn slip, you owe us $100 + 10% interest for the loan itself.

So to redeem your item anytime within the next 30 days, you need to pay us $110.

The 10% interest accrues every 30 days, starting from the day of your loan. So 42 days after your loan, you owe the first $10 for the first 30 days, as well as the new $10 that accrued starting on the 31st day after the beginning of the loan.

We will hold your item for you to redeem for 90 days without you making any sort of payment. After that point in time, every time you pay at least one months worth of interest ($10), you extend the time that we hold your item for another 30 days. If you don’t pay any interest, even after the 90 day point, we have the legal right to take ownership of your item as payment. This is called “pulling” your item.

As I already said, if you default on your payments, we simply assume ownership of the item. This will not effect your credit score, won’t be a legal issue and you will no longer owe us any money.

We are sure you have questions. In the shop, we want to clearly communicate how everything works and answer all your questions before the entire process is finalized.

Follow your laptop

Lets follow your laptop through what happens to it after a pawn.

After we give you the cash, we print a specific sticker with detailed information about your laptop and its “pawn number”. That sticker is attached to your item and we place your item on our holding shelf.

At some point that day, Jon or Lance (who work in the holding area) will take your item off the holding shelf, look up the ticket number in our system and then tell the computer software where in our secure storage space they will store the item.

They then place the item exactly in the same secure holding area entered into the software.

The item remains where it was located until you come back with the owed interest and the cash we loaned you.

After you make your payment at the front desk, the computer software tells us exactly where your item was located. We go in the holding area, locate your item, verify that the sticker on your item matches your pawn slips number and then bring your item to you.

We’re done!

Do you have more questions about How Pawn Shops Work?

While we are sure this article didn’t answer all your questions, we hope it helped give you a picture about how pawn shops work. Feel free to ask us any other questions you might have by contacting us in person. Our contact page is here.


The National Pawnbrokers association has an article explaining how pawn shops work as well – click here if you are interested in reading the article.

4 thoughts on “How Pawn Shops Work

  1. It’s good to know that when it comes to going to a pawn shop that we need to be prepare with an amount that will help us start the discussion to come to an agreement on a price. This is good to know so that we will do the research before going in so that we will be able to get what we want out of it. This will be really helpful so that will be able to get the quick cash that we want.

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