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Pawn shops have been around since the 1500s in Italy where the concept was introduced by the Medici family in an effort to provide a credit source to the unbanked. Read more. The 4 most frequently asked questions about pawn shops. What is a pawn loan. How does a pawn loan work. Pawn loans are a simple form of collateral credit.

Pawn loans are given in exchange for an item that the pawnbroker, thats what we call the person who gives the loan, holds onto as security, or collateral, until the loan is paid back.

Once the pawn loan is paid back the item is returned to the client.

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