When the word ‘Pawn shop’ pops into your mind, you must be thinking about antiques, old items, and small shady stores in the alley of an old street, well to bust your bubble, pawn shops are much more than just a stop for antiques and on top of that, they are not shady at all. In fact, the business of pawn shops has been rising, and it is considered one of the fast-moving businesses in the United States of America.
Their business model is so diverse, with buying and selling multiple items, they offer loans too, where you can get instant cash in exchange for your valuable items.
They give you a short-term loan in exchange for your valuable items. You can pawn your items to them for a couple of months in exchange for fast cash, and once you pay off your loan, you can always get your valuable items back. But here’s a risk. People often fail to pay back in time, so pawnbroker usually sells their items, and people end up losing their valuable collateral items.
After all this, you must be wondering about this main question, are pawn loans even worth it? Well, stick to us and keep reading. Let us help you and give you an ultimate guide on how pawn shop loans work, their requirements, how they charge interest rates, their significant pros and cons, and how you can make the most out of it. And by the end of this article, you will definitely have your answer.
So, let’s get started…
How does a pawn shop loan work?
To get an instant and hassle-free loan, go to google and search ‘pawn shop’ near me. Check the reviews of all the shops and visit the ones with the most positive ones.
First, you have to take any valuable item, such as any piece of jewelry, antiques, fine watches, or any electronic item, with you to pawn. The pawnbroker and the team will carefully assess your item’s worth, condition, value, and resell potential and then will offer a loan if they accept it. If you proceed with the loan and accept, you will walk away with instant cash and a pawn ticket in your pocket. You will need the ticket to get your collateral item back when you pay off your loan, it’s like a receipt.
Plus, the point about this whole process is that there are not any such rules or regulations to get a loan. This type of loan doesn’t require a credit check or anything. All they need I your identification card, so, of course, you must be 18+. Pawnbrokers are generally very smart and have been running this business for years, so if you try to scam them with a fake ID, you will be caught instantly, so make sure you do no such thing.
If you still have doubts about safety, let us enlighten you with the fact that most pawnshops in the area of Brockton are highly reputable. And such pawnshops are constantly in touch with legal and law enforcement to avoid dealing with stolen items. Because of this, the pawnshop will likely ask you to show them proof of purchase, such as any receipt, to confirm the item’s ownership.
Keep this thing in mind that the item or items you pawn can vary from store to store. Some stores may offer you very high demand, and some may provide you with mediocre ones. It also depends on the type of the items. High-demand items such as pieces of jewelry, firearms, electronics, smartphones, a box of tools, and of course, musical instruments. These items are top in demand and can offer you an excellent price if they are in good condition. Next, what happens is you usually pay back your loan within the mutually agreed-upon time. Pawnbrokers generally give around 60 days, give or take to collect your item and pay off the loan.
Please note pawnbrokers charge specific interest and fees for this service. So, the amount you loaned will not be exact when you return it. This is not a scam; this is how they operate their business.
If life happens and you are unable to pay within the due date, most reputable pawn shops give you the chance to extend or renew the loan. And if you still can’t pay back for any reason, the pawnshop eventually sells your item to get its money back. There is no scam here as well cause; obviously, they are running a business and do not give out loans on a charity basis. If they feel they are losing, they will sell your item with the same amount of your debt. And believe us, their business runs so smoothly and well, they will be able to sell it and make money instantly.
For your better understanding, let’s move forward and discuss some of the pros and cons of pawn loans.
What are the pros and cons of pawn loans?
Top 3 pros of pawn loan:
- They offer fast cash: One of the main pros of pawn shops is that they lend you a loan right away. So, no waiting in the long queue, no hassle filling up the paperwork or anything. They offer instant loans, and the process is pretty fast. So, in cases of emergencies, people usually run to them. Their approach is also simple and easy. Just pawn your item, show your ID card, and walk away with the cash in your pocket.
- They keep your items safe: It is customary to think that pawnbrokers might lose your items, or they may sell them behind your back. You must have doubts and trust issues, but that is totally fine. Truth be told, they don’t operate this way. Highly reputable pawnshops, such as in the areas of Brockton, are highly secured. They have CCTV cameras and lockers to keep your items safe. Pawn shops are not scammers, and they run their businesses very professionally.
- They offer multiple loans: If you are already in debt and have a considerable credit history and go to financial institutes to process another loan, they will simply refuse because, as per the rules, you are supposed to pay the first loan. But pawnshops will never reject you. They offer multiple loans to the same person at a time. As long as you pawn your valuable items to them, they will provide you with various loans.
Top 3 cons of the pawn loan:
- They will sell your items: Pawnshops are a top business and highly run on their profits. If you are unable to pay the loan in the mutually decided time and ghost the pawnbroker, they will simply sell off your items without your approval. They have the receipt, your item, and the right to do so. They may even sell it at a higher price to have more profit. This is why it is always recommended not to put down any items you have a sentimental attachment to. For example, your wedding diamond ring or something you are not comfortable losing because there are high chances of losing that item permanently.
- They charge interest rates and fees: For all the loans they offer, they charge a certain percentage of interest on it, which is mostly charged monthly, and a certain amount of their regular fees. Now they can be a bit expensive for some people who are already in debt. Interest can vary anywhere from a minimum of 10% to a maximum of 210%. This can make the borrowers tense as repaying the loan will be challenging. But on the brighter, if you see, they usually give you a time period of 60 days to pay off the loan, and if you pay it within the first month, you will be charged with interest only once.
- They have a limited amount of loans: Most pawn shops offer multiple loans, but they have a certain fixed and limited amount for this loan to be borrowed per person. The average loan amount can vary between $200 to $350. But on the brighter side, your loan can be for a higher amount if you bring in an antique and a valuable item. Truth be told, if your financial terms are not good and you are struggling financially, then this might not be the place for you; this small amount will not be able to fulfill your financial needs.
Now, if you have already made up your mind about taking a loan from a pawn shop, then let’s proceed with the following steps: what actually do the pawnbrokers ask for while giving out the loan?
What is the pawn shop loan requirements?
Loan processing from financial institutes like banks and insurance companies requires a lot of things such as proper credit checks, financial documentation, income slips, and verification, etc. But, at pawn shops, you will not find such a long list of documents to submit. Their procedure is pretty simple. Just go with a valuable item of collateral, its receipt, and your valid identification card. And that’s it; no other documents or requirements are needed as such. The major pro of pawn shops is that they don’t require credit checks or report your debts, so taking a loan out won’t impact your credit in any case. However, if you aim to build a good credit history, then a pawn shop loan is not the right place for you. You may have to opt for other financial institutions for this.
As of now, you must have enough details and knowledge regarding pawn loan, how it works and what are its major pros and cons. Moving forward, let’s discuss the last thing when you really should opt and consider taking out loans from the pawn shop.
When should you consider taking the pawn loan?
In today’s era, inflation is at its peak, and the financial problem has become a significant problem for most people. If you are dealing with minor financial emergencies that do not require massive amounts, such as $500 plus, then a pawn shop loan can be an ideal place for you. It’s a great trade off if you are willing to pay its fees and interest rate and pay off the loan in a short period of time.
Let’s say you need to pay your bills, which are no more than $300 at the moment; you don’t have cash in your bank account, but you are confident that you will receive your monthly pay cheque soon. In this case, you have an option of repayment, so there is very little risk of you falling behind and losing your valuable item. If this is the scenario you are stuck in, then pawn shops are the best options for you. Search for ‘the best pawn shops near me, and you will find plenty of them in your area.
All in all, you must have your answer to the question asked earlier, are pawn shop loans even worth it? The answer is yes.100% yes. For short-term financial issues, pawn loans work wonders and can help a lot of people like you and me financially.
No place is perfect, and everything has its own certain criteria. Banks and other financial institutes will ask for a credit checklist of documents, which may take time to process your request. But they can also offer you a considerable amount and more time for repayment, whereas pawn shops have no requirements or eligibility criteria. Still, they have a limited amount of loans with short-term repayment. Now the choice is yours; weigh your options, evaluate your situation and choose wisely.
Pro tip: One last pro tip from us, if you choose to opt for pawn shops, make sure you do your homework by looking t up on social media, check its reviews and authentication, and then make your move. It’s always better to be safe than to be sorry.