Pawnshops and pawnbroking have been around for thousands of years. The basic idea behind any pawnshop is to loan people money. It goes like this:

You bring in something you own and give it to the pawnbroker as collateral for a loan (this act is called pawning).

The pawnbroker loans you money against that collateral.

When you repay the loan plus the interest, you get your collateral back.

If you don’t repay the loan, the pawnbroker keeps the collateral.

Source: http://money.howstuffworks.com/pawnshop1.htm