Pawnbroker

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A pawnbroker is a money lender. A bank is also a lender, but whereas a bank generally will not make loans for only $100, a pawnbroker is very interested in making loans this small. A pawnbroker will probably make you a loan even if she has never seen you before. For doing this she will want something from you to keep in case you disappear without paying her back. This is called collateral, and the pawnbroker will accept as collateral almost anything of yours that has some value. For example, you might go to the pawnbroker with a trumpet, and say, "How much can you lend me for this trumpet?" and she may say, "$100." You give her the trumpet and she gives you the $100 and a ticket (pawn ticket) that records the transaction. You have until a specified date to pay her back the $100, plus the interest she charges you on the $100. Hopefully, you can go back before that date, present the ticket she gave you, and pay her the $100 plus the interest, and she will give you back your trumpet. If you can't pay her back on time, she can keep the trumpet and display it in her shop and try to sell it. Note that the trumpet might be worth $200, but she will only give you $100 because if she has to sell it that's where she gets some of her profit. In this example the pawnbroker has given you a loan for 50 percent of the value she puts on the trumpet. Depending on the collateral you can offer, this percentage could vary considerably. If the pawnbroker thinks it will be hard to sell your item, she won't lend you as much money. If all you want to do is sell your trumpet, a pawnbroker is probably not the best place. Payday loan operations also offer small loans.