What is a Pawn Shop? A pawn Shop is a Collateralize loan. Just like when a bank gives you a loan for a house or a car, the house or car is the collateral. At a pawn shop we use your Guitar, Gun, Gold Jewelry ect. as collateral instead of the house or car. One major difference is that a pawn shop retains possession of the collateral until the loan is paid in full. The best part is that there are no credit checks! the whole loan process usually takes less than five minutes and you are out the door with cash in your hand. When you repay the loan you receive your property back in the same condition you pawned it.