Legal Definitions - pawnbroker

A pawnbroker is a licensed individual or business that lends money to people in exchange for personal property, which serves as security for the loan. The borrower agrees to repay the loan, plus interest, within a specified timeframe. If the loan is not repaid as agreed, the pawnbroker has the legal right to sell the pledged property to recover the money lent.

• Example 1: Unexpected Car Repair

  Maria faces an unexpected car repair bill that she cannot immediately afford. To get the necessary funds quickly, she takes her antique gold locket, a valuable family heirloom, to a local pawnbroker. The pawnbroker appraises the locket, offers Maria a loan of $300, and explains the interest rate and the 30-day repayment period. Maria accepts the loan, leaves the locket with the pawnbroker, and receives the cash. This scenario illustrates a pawnbroker lending money, receiving personal property (the locket) as collateral, and establishing a clear repayment agreement with interest. If Maria fails to repay the $300 plus interest within 30 days, the pawnbroker would then have the right to sell the locket.

• Example 2: Bridging a Financial Gap

  David, a freelance graphic designer, needs a short-term loan to cover his rent until a large client payment comes through next week. He decides to pawn a high-end camera lens he rarely uses. He visits a pawnbroker who assesses the lens and offers him a $700 loan, detailing the interest and the 60-day repayment term. David agrees, leaves the lens with the pawnbroker, and uses the money for his rent. This demonstrates a pawnbroker providing a loan using a valuable piece of personal property (the camera lens) as security. David gets immediate funds, and the pawnbroker holds the collateral, with the understanding that if David defaults on the loan, the lens can be sold to recoup the lent amount.