Another way of borrowing money -
You leave something valuable (the pawn) as security against a loan issued by the pawnbroker
When you pay off the loan and charges you get the item back
No credit rating being assessed nor references checked
But interest rates are much higher than a bank or building society

There are rules to protect you
· Pawnbrokers must have consumer credit licences from the Office of Fair Trading
· Standard documents must be used and strict procedures followed
· Rules differ if you borrow more than 25 pounds
· For more advice on your pawn agreement contact your local citizens advice bureau, law centre or trading standards department of your local authority

Making the agreement
· When you pawn an item you will be asked to sign a credit agreement and must be given your own copy
· You will also be given a pawn receipt which can be combined with the credit agreement
· You must keep the documents safe as it is proof that you own the item
· Do not sign the agreement unless you have checked it and understand all the terms and conditions

Getting the item back - redeeming
· You can get your item back at any time
· You must give your pawn receipt and pay what you owe under the agreement
· You normally have six months in which to do this
· But the pawnbroker may agree a longer period at the time of making the agreement
· A pawnbroker cannot refuse to redeem a pawn unless there is a good reason such as, no pawn receipt is presented, the pawn does not belong to you and you do not have the borrower's permission to redeem the pawn
· By law you may be entitled to compensation if the pawnbroker keeps your pawn without good reason but in Scotland the courts can order the pawn to be returned to the owner if found to be unreasonably retained, stolen or obtained by fraud.

What to do if you lose your pawn receipt
· Tell the pawnbroker so that no one else can use your receipt
· By signing a statement before a Commissioner for Oaths or Justice of the Peace or Notary Public stating you have lost your pawn receipt and paying what you owe will allow you to get your goods back if over 25 pounds below that figure a simple signed statement will do.
· A solicitor will be able to undertake this function but is entitled to charge a fee.

What to do if you cannot redeem
· If by the deadline you cannot pay what you owe and the amount borrowed is less than 25 pounds, the pawnbroker will keep your pawn
· If you borrowed more than 25 pounds the pawnbroker is entitled to sell the pawn to recover what you owe
· Whilst the pawn remains your property until it is sold the loan remains outstanding and interest will continue to be charged
· If the pawnbroker decides to sell the pawn you can still redeem it until it is sold
· If the amount you borrowed was more than 50 pounds you are entitled to be given 14 days written notice before the sale goes ahead
· The notice should state the asking price, when, how and where it will be sold
· Once sold the pawnbroker must send you a notice within 20 working days stating the price obtained during the sale and the sale costs
· If the item fetches more than you owe under the agreement including sale costs, the surplus belong to you
· If there is a surplus you must claim it - do not wait for the pawnbroker to send it to you
· If not paid promptly by the pawnbroker you may be entitled to claim interest
· If the pawn is sold for less than you owe, you are liable to pay the difference
What to do if you are unhappy with the price
· Raise the matter with the pawnbroker if you think the item could have been sold for a better price, or the sale costs are unreasonable
· Insurance valuation and price paid when new do not reflect second hand prices which are much lower
· If sold at public auction the price obtained will normally be deemed fair for legal purposes however low it may be
· By using the small claims procedure designed for claims up to 3000 pounds (750 pounds in Scotland) you can challenge the pawnbroker who will have to prove that the price was fair and the sale costs were reasonable
· It is easy to use and you do not have to go to a solicitor, only very limited costs can be awarded against you even if you lose
· For further advice contact your local Citizens Advice Bureau or Consumer Advice Centre - Leaflets available from any county court (Sheriff Court in Scotland)
Extra time to pay
· Negotiate with pawnbroker to renew your loan if you do not want your pawn to be sold and you cannot redeem it
· Interest that has built up will usually asked to be paid
· A new agreement (a modifying agreement) must be given. It will be similar to the original unless you change the article pawned or add another item
Technical jargon's meaning
· Realisation : when the pawnbroker sells your pawn to recover a debt you cannot pay
· Renewal: when you are given more time to pay off your loan by the pawnbroker
· Redemption Period: the period during which you can redeem your pawn