Okay so let’s get to the bottom of this sometimes serious question that a lot of people just don’t understand the answer to.
When it comes to whether or not a pawnshop can sue you that question can depend on a variety of circumstances.
However most the time when people are worried about a pawn shop filing a lawsuit against them it often means that people are afraid that if they forfeit a loan, or are unable to come back and get their items, that the pawn shop will turnaround and sue them for whatever the balance of the loan was.
The fact of the matter is this really isn’t the case. Pawn loans are otherwise known as secured loans, or no recourse loans.
What that means is that if you default on a pawn loan at the pawn shop really has no recourse against you legally because the loan was secured by the collateral that your items represented.
If this sounds confusing then take a moment to really think about what happens when you forfeit on a pawn loan. You see, what occurs is that the pawn shop will end up keeping whatever items you pawned to get that loan in the first place.
Those items represent the value of the loan to them. That’s the entire purpose of them keeping them as collateral while you have the loan.
Your pawn shop is unlikely to sue you unless you do something like trying to pass off a fake rolex.
Pawn Loans Are Secured Loans
Because those items satisfy the balance due on the loan plus any interest or storage that may have accrued on it, the loan is considered secured.
This is unlike your credit card where when you buy something there is nothing backing up the amount that you borrowed to buy whatever it is that you purchased. That is known is an unsecured loan.
This is exactly why you don’t see many pawnshops been involved with lawsuits over the loans that default. They have the items that secured the loans and therefore don’t have any real issue to try to pursue you for anything else assuming that the items you pawned were authentic and not counterfeit or something like that.
What Are Some Reasons That Pawn Shops May Sue You?
Now just because pawnshops don’t sue customers for loans they defaulted doesn’t mean that they don’t sue anyone.
Pawn shops are just like any other business. If you do something that harms their business they may have the option to file a civil lawsuit against you for damages done.
Additionally if you take something that is counterfeit or fake into the pawnshop to either sell it them or make a loan against it, the pawn shop may choose to turn around and sue you for the money that they lost doing that transaction.
That is one very realistic scenario under which pawnshops will occasionally sue people.
This really doesn’t happen all that often though because pawnshops are actually very good at catching this kind of activity and these kinds of counterfeit items that float around the street all so often.
Other scenarios under which pawn shops me sue you are if you do something crazy such as vandalism or destroying some of their property. But they aren’t unlike any other business in that sense and they won’t do anything that any other business wouldn’t.
So with that in mind you don’t really have to worry about a pawnshop suing you unless you know that you are doing something wrong.
Like we discussed above, selling something this counterfeit or fake pawnshop knowingly would be something that you could be doing wrong.
Mandy Dormain started working for Pawn Nerd in 2020. Mandy grew up in a small town in northern Tennessee. But moved to New York for university. Before joining Pawn Nerd, Mandy briefly worked as a freelance journalist for several radio stations. She covers politics and economy stories.