Licensed and State regulated pawnbrokers offer consumer loans that are secured by personal goods. Pawn shops provide short term, safety net type of loans to approximately thirty million Americans, many who cannot secure financing any other way. Unlike conventional banks, pawnbrokers make $10, $40, $100 and other low principle cash loans to their communities.

The pawn system is fairly simple. A person brings in an item of value to a pawn shop, and can either offer to sell it outright to the shop owner or pawn it. Traditionally, pawning an item means to borrow against the item (collateral) and leaving the article as security until repayment of the item is made. 

If you cannot pay the loan back you simply do not pay to redeem your loan, the item is foreclosed to the pawnbroker, and you are not subject to a negative credit report entry. This is called a non-recourse loan. Nothing goes on your credit report. 

This is called a non-recourse loan. Nothing goes on your credit report. You simply lose title to your item. If you come back to pay back teh pawnbroker for your loan, on or before the due date, you get your item back. (there is of course, interest charged and fees associated with the loan-a contract.) California Pawnbrokers have some of the lowest interest rates in the country.