To put it simply, customers pledge a collateral—property offered as a form of security in case of nonpayment—to secure a loan. In return, pawnbrokers lend them the money. When customers pay back the loan, their collateral is returned to them.
Pawn loans are made on everything from jewelry to almost anything of value. If the customer elects not to redeem his or her collateral, there is no credit consequence to the borrower and the items are later sold at a value price to retail consumers.