Every person engaged in the business of receiving goods, including motor vehicles, in pledge as security for a loan is a pawnbroker within the meaning of this division.
General ProvisionsDefinitions
Section § 21000
If you run a business that takes people's belongings, like cars, as a guarantee for a loan, you're considered a pawnbroker according to this law.
pawnbroker definition pledge as security loan security
Section § 21000.7
This law clarifies that when you buy something in good faith, it doesn't count as taking that item as collateral for a loan. In other words, if you're genuinely purchasing goods, it shouldn't be considered that you're using those goods to secure a loan.
As used in this division “receiving goods as security for a loan” does not include a good faith purchase of goods.
good faith purchase collateral loan security
Section § 21001
This law defines what "compensation" means for a loan or delay in fulfilling a financial commitment. It includes not just fees like interest and storage, but also any related costs that come with a loan or waiting to repay a debt.
“Compensation” includes expenses, interest, disbursements, storage charges, and all other charges of any nature in connection with a loan or forbearance.
compensation definition loan costs forbearance charges
Section § 21002
"Pledged property" refers to items held as security for a loan where the ownership, or title, remains with the borrower, not the pawnbroker. On the other hand, "vested property" is when ownership has shifted from the borrower to the pawnbroker. Vested property is distinctly different from pledged property.
(a)CA Financial Code § 21002(a) As used in this division, “pledged property” is property held as security for a loan, the title to which remains with the pledgor and has not passed to the pawnbroker pursuant to Section 21201.
(b)CA Financial Code § 21002(b) “Vested property” is property the title to which has been transferred from the pledgor to the pawnbroker pursuant to Section 21201. Vested property is not pledged property.
pledged property vested property security for a loan
