What is a pawnbroking loan

What is a Pawnbroking Loan?


 Member of the National Pawnbrokers association A Pawnbroking Loan is a short-term loan that is secured against items of gold, silver, diamond jewellery or quality watches. The amount of the loan is dependant on the item(s) provided as security.


The usual terms for a pawnbroking loan is 6 months

When you bring your item into us at Morgan Banks, we will value your item and agree a loan amount with you that you feel comfortable about repaying. once the agreement has been signed and concluded we will give you the money and place your items securely in the safe until you return to repay the loan.

You can either repay the loan during the term of the loan when it suits you (reducing the loan cost), or repay the loan at the end of the pledge term. When the loan is fully repaid we will return your item(s) straight away.

The interest accrues on a daily basis, therefore the sooner you repay the loan the cheaper it is.

Our monthly rate is currently 9% which makes a representative APR of 137.2%


How much can you borrow against your item(s)?

AT Morgan Banks you can borrow from £10 to £10,000 subject to the assessment of your item(s). Morgan Banks could lend up to 70% of the pre-owned item value dependent on the quality of the item(s).

What does a Pawnbroking Loan cost?

Our interest rates are variable depending upon how much you borrow. Contact us for more information.



  • Total Loan - £1000  (Based on a standard 6 month loan)
  • Interest Rate - 9%
  • APR - 137.2%
  • Monthly interest - £90
  • Total Interest - £540.00
  • Full Redemption Value - £1540

* if this loan was redeemed at the end of the first month - total payable would be £1090.00

Example 2

  •  Total Loan - £100
  • Interest Rate - 7.99%
  • APR - 118.9%
  • Monthly Interest - £7.99
  • Total Interest - £47.94
  • Full Redemption - £147.94

* if this loan was redeemed at the end of the first month - total payable would be £107.99

What is an APR?

An APR (Annual Percentage Rate) is the cost of credit expressed as a yearly rate. A Pawnbroking Loan is not designed to be a long-term loan. A Pawnbroking Loan charges interest daily which means the cost of credit could work out to be cheaper than unauthorised bank fees.

What are pawnbrokers?

  • You hand over the item (known as a pawn or pledge) to the pawnbroker who will value it for you. 
  • The pawnbroker should give you a ‘Pre-contract Credit Information form’ if you are a new customer - if you’ve borrowed from the firm in the last 3 years, you can ask for this.
  • You’ll be given a credit agreement to sign
  • Check this carefully and ask questions if you don’t understand anything.
  • The agreement will set out how long the loan lasts and how much it will cost. It will usually be a minimum of six months (but you can agree a shorter or longer period).
  • Unless it’s part of the credit agreement, the pawnbroker will give you a separate pawn receipt which you’ll need to keep to prove you own the item.
  • You can redeem the pawn at any time, by paying what you owe and getting the item back. If you don’t repay the loan during the redemption period, the pawnbroker can sell it to recover the cash.

There is a 14-day cooling off period, within which you have a right to withdraw from the agreement and just pay interest for the period of the credit.
If you want to use a pawnbroker choose one that is a member of the National Pawnbrokers’ Association, which has a code of conduct for members.

What happens if you don’t repay the debt

  •  If you are unable to redeem the loan and you do not want your items to be sold, the loan can be renewed for a further 6 months by paying the interest only and leaving the capital outstanding. This may be done time and again.
  • If the pawned items are not renewed or redeemed at the end of the term we have the option to auction off the item to redeem our loss. In this situation we will communicate this with you.
  • This only applies to items over £75.

We publish our complaint procedure here