Which loan involves property held by the lender until repayment?

• A. Payday loan
• B. Pawn loan
• C. Title loan
• D. Student loan

Answer: (B)

In a pawn loan, you provide a personal item of value to the lender to hold as collateral, and they keep possession of that item until you repay the loan. If you repay, you get your item back; if you don’t, the lender can sell it to recover the funds. This setup is what distinguishes pawn loans—the item is actually held by the lender during the loan period.

Payday loans don’t involve surrendering an item as collateral, and title loans use the vehicle’s title as security (the borrower may still have use of the car, but the title is held by the lender). Student loans are unsecured or rely on other repayment arrangements and don’t involve the lender holding your property.