8 Pawnbroking Myths That Simply Aren’t True

By H&T Pawnbrokers Thu, Jul 28, 2022
Thanks to Hollywood’s portrayal of pawnbroking, many have made incorrect assumptions about how pawn loans work and what the industry is really like – particularly in the UK. Pawnbrokers can be a great financial resource and provide useful, professional financial services that you may not be offered elsewhere. Most modern pawn shops are a far cry from the dark and dusty pawn shops of old, and you may be surprised at what’s on offer – both in a financial services and retail sense.

Here at H&T, we want people to see the reality of modern pawnbroking rather than miss out due to preconceptions which are not rooted in facts. Here are the 8 most common misconceptions about pawn loans, pawnbrokers and their practices – how many did you believe?

You will lose your valuables

85% of pawn customers get their valuables back at the end of the loan term

Taking a pawn loan doesn’t automatically mean you’ll lose your valuable item(s). If you pay your pawn loan back in full and within the agreed time, then you’ll get your item back, and if you pay your loan off early, you’ll get your item back early too. The pawnbroker will not make this difficult for you to do, and you’ll know everything about the loan before you sign. If you know that you will not be able to pay the loan back and you take it out anyway, then you will be at risk of losing your item.

The pawnbroker will try to keep your item to make more profit

Pawnbrokers make 0% profit from selling pawned items

Pawnbrokers will never try to rig the system so that they can get their hands on your stuff. It’s actually not profitable for them to do so, and any extra money that is made once all costs are covered must be given back to you. Any item pawned for £75+ will only ever be sold to cover the unpaid loan balance and will never become the legal possession of the pawnbroker.

Pawnbrokers aren’t regulated and there are few customer protections

All UK pawnbrokers are regulated by the Financial Conduct Authority

Just like the banks, in order for pawnbrokers to trade, they must be fully authorised by the Financial Conduct Authority. Pawnbrokers also have to sign up to the Anti Money Laundering register before they’re allowed to trade and regulatory, industry-specific procedures are followed at every level of the business. The National Pawnbrokers Association also provides further support and resources to help protect customers and keep everything running smoothly.

Pawn loans are really expensive

Pawn loans are typically cheaper than payday loans, overdraft fees and some other lending types

It can be easy to get the wrong idea about how expensive pawn loans actually are. This is because the interest rate is always shown as an annual percentage; the amount you’d pay over the course of one year. However, pawn loans are typically given for a term of 6 months, which means the annual rate is going to make your pawn loan look more expensive than it actually is. It’s better to look at monthly interest rates, as this will give you a better idea of the costs. Here at H&T, our monthly interest rates are as follows:

Loan amount Monthly interest Daily interest
£10 - £1,500 10.49% 0.34%
£1,501 - £3,500 9.49% 0.31%
£3,501 - £5,000 9.00% 0.30%
£5,001 - £7,500 8.00% 0.26%
£7,501 - £10,000 7.00% 0.23%
£10,001 - £15,000 6.00% 0.20%
£15,001 - £50,000 5.00% 0.16%
£50,000+ 4.00% 0.13%


Only desperate people use pawnbrokers

The majority of pawn customers use pawnbrokers for convenience.

Pawn loans have been seen as ‘last resort’ type of credit in the past, partly because a credit check is not necessary. However, as the banks become stricter and consumers demand more flexibility, pawn loans are increasingly seen as a safe and convenient short-term credit option which will never leave you in financial difficulty or cause a debt spiral. People take pawn loans for many reasons and it is rarely desperation that drives them to seek this type of credit.

You can only get small pawn loans

Pawn loan amounts depend on the value of the item – you can borrow thousands.

The amount you can borrow from a pawnbroker depends on the value of the item you want to pawn. You don’t need luxury watches or fine jewellery either - you can pawn any valuable item; including antiques, vehicles and designer goods. Your credit score has no effect on the amount you can borrow. Of course, if you want to get your item back, you must be able to pay the loan in full, so even if you can borrow a certain amount, you should always check to see if it’s affordable for you personally.

Pawn loans are not popular

UK pawnbrokers helped more than 350,000 customers in 2018 and lent £300m.

As pawnbrokers become more visible on the high street, more and more people are realising that they’re a legitimate, professional credit option that may actually provide more flexibility than the banks and other lenders. People from all walks of life use pawnbrokers and for many different reasons – in many cases, it’s simply the most convenient option for the customer and more people are realising this every year.

Pawnbrokers sell outdated and largely unwanted items

Pawnbrokers sell a wide range of desirable items, from the latest tech gadgets to vintage jewellery.

Pawn shops are a retail business as well as a lender – they know they need to attract customers and make sales, so no decent pawnbroker would ever stock their premises with items that no-one wants to buy! Contrary to popular belief, only a very small percentage of items sold in a pawn shop are the result of failed pawn loans – most items put up for resale are bought directly from the customer, or are sourced from auction houses or similar. You can find the latest electronics, modern luxury watch designs and contemporary jewellery as well as the more retro, vintage and antique pieces.

Want to see for yourself? Come and visit us in any one of our 247 nationwide branches today, where you can browse our wide selection of watches, jewellery and electronics, speak to us about a pawn or personal loan, get foreign currency or even cash a cheque.


Pawnbroking Loans are secured on your items, if the loan is not repaid it will be sold to pay the debt.