I’ve thought about this question and the best way to define in a very basic way. This is what I’ve come up with as a pawnbroker for 30 Years. “A pawn or collateral Loan is simply an advance of cash to a person using that person’s property as the collateral for the advance. That person then has the option to redeem or not redeem their property, in which the latter, causes no negative consequences to their credit nor does it hinder their ability to do another collateral loan”.
There are certain state laws in each state that require different parameters such as holding time, fees charged etc … but the above definition is the simple definition of a pawn or collateral loan. Some say it’s not a loan in the original sense because there is no expectation of pay back and no negative consequences to your credit. There also is no one tracking you down to collect. It’s simply an agreed upon transaction between you and the pawnbroker.