We always sang it like this :

I used to play my old banjo
And play it on my knee
But now the strings have broken so
It's no more use to me

I took it to the mender's shop
To see what he could do
But all that he could say to me
Was "no more use to you"

:)

I u-loo-loosed to pi-li-lay my o-lo-lold banjo-lo-lo
And pi-li-lay it o-lo-lon my kni-li-lee
But no-lo-low the stri-li-lings have bro-lo-loken so-lo-lo
It's no-lo-lo more u-loo-loose to mi-li-lee

I to-lo-look it to-loo-loo the mi-li-lender's sho-lo-lop
To si-li-lee what hi-li-lee could do-loo-loo
But a-la-lall that hi-li-lee could si-li-lay to mi-li-lee
Was no-lo-lo more u-loo-loose to you-loo-loo