Pawn Agreement Template

This free pawn agreement form documents the entire process from start to finish. A “pawn” transaction begins when collateral is stored with the lender and ends when the items are redeemed or forfeited. Both licensed pawn stores and private lenders can use this offering to collateralize loans.

• Includes space for transaction number, date of agreement, and contact information for the pawnshop and borrower
• Notes the amount of cash that’s financed and connects that amount to the pledged collateral
• Requires payment by a certain date. Ownership of pledged collateral is automatically forfeited if payment isn’t received by the agreed-upon date.
• Allows the borrower to pay early without penalty. The payment terms state that collateral will be returned upon receipt of full payment.

Who It's For

This agreement is beneficial for anyone who wants a physical record of a loan backed by an item. You’ll find these most often in the following situations:

• Pawn shops. Retail pawn stores make dozens (sometimes hundreds) of these agreements every day. They need a clean, professional-looking form that they can customize for each customer without recreating the document each time.
• Private collateral lenders. A cousin to the pawn shop agreement, these forms are also used whenever somebody makes a loan and accepts personal property as collateral. Without a brick-and-mortar store, these private agreements can help prevent future disputes over who owns the collateral if payment isn’t made.
• Busy consumers who pawn high-value goods. Whether you’re a professional borrowing against expensive tools, musical instruments, or jewelry, or you occasionally pawn seasonal holiday ornaments to make ends meet, you can benefit from understanding how long you have to repay the loan, what happens to your property if you miss the deadline, and whether you can pay early to get your items back.
• Entrepreneurs who occasionally accept items as collateral for private loans. This is the formal agreement counterpart to selling “subject to payment” in a storefront. These agreements can ensure both parties understand terms, even if the transaction isn’t conducted in a traditional retail environment.

What's Included in the Pawn Agreement Template

The included pawn agreement template has everything you need to draft your own clean, professional legal form:

• Transaction information. Includes space for a unique transaction number, the date of agreement, and complete contact information for both the customer and pawnshop
• Loan amount. The amount of cash the customer will receive in exchange for collateral
• Pledged items. Includes multiple line items where collateral can be described. Specifies who has ownership of the collateral while the agreement is in place
• Payment due date and forfeiture clause. The agreement becomes void (the customer loses rights to collateral) when the due date passes
• Payment terms. Specifies where and how the borrower can make a payment. This form accepts payment by cash or credit card. Checks are not accepted. 

Prepayment provision. Allows the customer to pay the full amount before the due date. States that collateral will be returned to the customer upon receipt of full payment

How to Write This Pawn Agreement

The template covers the form itself. Here’s where you should focus your attention when filling it out.

1. Describe each pledged item with as much detail as possible

You can never be too specific when listing collateral. “Gold necklace” won’t hold up if there’s ever a dispute about the items being returned. Specify material, weight, brand (if applicable), condition, and any other identifying marks. You should also photograph any items at the time of the pawn. If something happens and you end up in court, someone who has pictures of the actual items has a stronger case than someone who doesn’t.

2. Agree on a realistic due date

While 30 days from the sign date is standard in many consumer pawn transactions, you may want to adjust this if you’re working with a private borrower. Give yourself some flexibility if you’ll be allowing extended repayment. You can add this to the payment terms section before printing the template.

3. State the financed amount as a percentage of the collateral value

Licensed pawn shops usually run anywhere from 25% to 60% of what an item can be resold for. If you ever have to defend your agreement in a dispute, the lending party that gives a borrower $500 for a $3,000 item without any paperwork documenting the item’s value will lose. Include how you valued the item. A receipt? Online valuation? Quick snap appraisal? Whatever you choose, make note of it. 

4. Define “full” payment 

Does it include fees or interest? Storage? Make sure “full payment” includes any carrying costs above and beyond the amount specified in the “Financed Amount” section. If you expect the borrower to pay any additional fees, state those up front.

5. Decide if you’ll accept partial payments

Our template doesn’t address partial payments. If you expect your borrower to pay in installments, customize the template by adding a payment schedule to the payment terms section before sending it for signature. Allowing partial payments without addressing this point in the contract creates a gray area around exactly when collateral can be returned to the borrower.