Pawnshops typically offers collateral-based loans — which means that a loan is secured by your assets. You take in assets of value that you own, and the pawnshop will offer you a loan against these assets. The pawnbroker then keeps your item until you repay the loan. Loan amounts are usually a fraction of the item’s actual value.
For example, if borrowers are currently paying 10% interest and utilization is at 50% , lenders will only receive 5% interest as the 10% interest has to be spread over the whole pool of money even though only 50% is being used.