Pawnbrokers provides an accessible financial service for those seeking quick loans using personal assets as collateral. Familiarity with pawnbroking terminology is essential for understanding how this process works, whether you’re considering pawning a valuable item or simply wish to know more about the industry. This glossary provides clear, easy-to-understand definitions of key terms related to pawnbroking, tailored for both newcomers and experienced individuals.
Additional Insured
An individual added to a loan or insurance policy who receives the same coverage as the original policyholder. In pawnbroking, this can include joint owners of pledged items.
Appraisal
An assessment conducted by a qualified professional to determine the value of an item intended for pawn. This valuation considers the item’s condition, rarity, and market demand.
Asset
Any valuable item offered as collateral for a loan. Common assets include jewellery, electronics, and luxury watches.
Auction
A public or private sale of an item to the highest bidder, often conducted when a pledged item is not redeemed by the borrower within the loan term.
Collateral
An item of value that a borrower pledges to a pawnbroker as security for a loan. If the loan is not repaid, the collateral may be sold by the pawnbroker to recover the loaned amount.
Condition
The state of the item being pawned. Items in better condition generally yield higher loan amounts.
Default
Failure to repay the loan according to the agreed-upon terms, leading to the pawnbroker’s right to sell the pledged item to recoup the loaned amount.
Depreciation
A decrease in an item’s value over time due to age, wear, or other factors, impacting its resale or loan value.
Due Date
The final date by which the borrower must repay the loan and interest to avoid losing the pledged item.
FCA (Financial Conduct Authority)
The UK regulatory body that oversees financial services, including pawnbroking, ensuring adherence to legal and ethical practices.
Grace Period
An extension of time beyond the due date during which the borrower can still reclaim their item without penalty.
High-End Pawn Loan
A type of loan involving high-value items, such as luxury cars, designer jewellery, or rare antiques, typically allowing for larger loan amounts.
ID Verification
The process of confirming the identity of a person pawning an item, often involving photo identification or recent utility bills.
Interest Rate
The cost of borrowing money, expressed as a percentage of the loan amount. In pawnbroking, this rate can vary based on the loan size and duration.
Loan-to-Value (LTV)
A percentage that indicates the ratio of the loan amount to the appraised value of the collateral. This helps pawnbrokers determine how much they are willing to lend against a particular asset.
Maturity Date
The date by which the loan must be repaid in full, including interest, to retrieve the pledged item.
NPA (National Pawnbrokers Association)
A trade organisation that represents and supports the pawnbroking industry, promoting ethical practices and standards.
Pawn
The act of pledging an item to a pawnbroker in exchange for a loan.
Pawnbroker
A professional or company that lends money to individuals based on the value of items pledged as collateral.
Pawnbroking Agreement
A contract detailing the terms of the loan, including interest rate, repayment period, and conditions for item retrieval.
Pay Down
An additional payment made on the principal of the loan to reduce the amount owed and the interest accrued.
Pledge
The item given to a pawnbroker as collateral for a loan. The pledge is held by the pawnbroker until the loan is repaid.
Pre-Contractual Information
Details provided to the customer before signing a pawnbroking agreement, outlining the terms, interest rates, and repayment obligations.
Redemption
The act of repaying the loan in full, including any interest, to retrieve the pawned item.
Repayment Schedule
An agreed-upon plan for repaying the loan, which may include periodic instalments or a lump sum payment at the end of the loan term.
Resale Value
The estimated market value of a pledged item if it is sold after a default. The resale value affects both the loan offer and the item’s attractiveness as collateral.
Secured Loan
A loan backed by collateral, such as jewellery or electronics, ensuring the lender can recoup losses if the borrower defaults.
Surplus
The excess amount returned to the borrower if a pledged item is sold for more than the outstanding loan and interest after a default.
Ticket
A physical or digital receipt provided by the pawnbroker, which includes details of the loan amount, item description, and loan terms. It acts as proof of the transaction and is required for redemption.
Valuation
The process of determining the worth of an item for the purpose of setting a loan amount.
Watch List
A log of high-value or luxury items, such as watches, used in pawnbroking to monitor resale trends and set competitive loan offers.
Yield
The total amount earned by the pawnbroker, including principal and interest, when a loan is repaid or an item is sold after default.
