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Simple English definitions for legal terms
pawnbroker
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A quick definition of pawnbroker:
A pawnbroker is someone who lends money to people and takes something valuable from them as a guarantee that they will pay back the money. This valuable item is called collateral. If the borrower doesn't pay back the money, the pawnbroker can sell the item to get their money back. Each state has rules that pawnbrokers must follow to make sure they treat people fairly.
A more thorough explanation:
A pawnbroker is a person who lends money to someone in exchange for personal property as collateral. The borrower has a certain amount of time to repay the loan with interest. If they fail to do so, the pawnbroker has the right to sell the property to recoup their losses.
Each state has its own regulations for pawnbroking. For example:
- Arizona Revised Statutes, Sections 44-1621 to 44-1632
- Nevada Revised Statutes, Sections 646.002 to 646.060
- Illinois Pawnbroker Regulation Act
- Ohio Revised Code, Sections 4727.01 to 4727.99
For instance, if someone needs money quickly but doesn't have good credit, they might go to a pawnbroker and offer their watch as collateral. The pawnbroker would lend them money and hold onto the watch until the loan is repaid. If the borrower doesn't repay the loan, the pawnbroker can sell the watch to recover their money.