Pawnshops offer collateral-based loans — meaning the loan is secured by something of value. You take in something you own, and if the pawnbroker is interested, he will offer you a loan. The pawnbroker then keeps your item until you repay the loan.

Is a pawnshop loan ever a good idea?

“Pawnshop loans might be a good idea if you are out of options and need money quickly,” said Bakke. “But only if you're 100 percent sure you can pay back the loan within the 30 days.” Also, since there's no credit check, you don't have to worry about the loan showing up on your credit report.

What is the catch for a pawnshop loan?

Interest rates and finance charges for pawn shop loans are often high. It's common to see interest rates between 5% and 25% a month. Another disadvantage is that if you don't repay your loan on time, the pawn shop can sell your item. And you won't get reimbursed if your item is sold for more than your loan amount.