If you’ve never used a pawn broker in Barberton, OH before to secure a loan, you likely have many questions. The process does not quite work the same way it does on TV or how some people expect. Knowing how this works helps you arrive at our pawn shop prepared and with the needed information. Here is an overview of the pawning process.
How Pawn Shops Work
Pawn shops usually sustain two lines of business. One is secured loans, and the other is retail sales. They may be specialists in jewelry, guns, antiques or anything else of value that is often used to secure loans.
To get a loan, customers bring in an item and we make an estimated value on it. From there, we determine the amount of the loan, which is usually slightly less than the overall value. The item stays with us until the customer pays back the loan with interest and additional fees.
Loans only require photo identification and a valuable item. There are no credit check or co-signor requirements.
The retail end of pawn shops involves items where the customer was unable to pay back the loan. While pawn shops are not necessarily in the business of buying items, sometimes customers voluntarily give up the item if they find they are unable to pay back the loan.
As indicated earlier, the amount of the loan is determined by the value of the item. It is normally set at about 50 to 60 percent of the value in case of default. That way a sale will recoup the costs of the loan and any interest. This also considers the cost of storage, security and demand for the item. Average pawn loans are $150, although that can be higher with more valuable items.
Interest rates are often around 20 percent. If you borrow $80 at that amount, your interest is $16. When compared to bank overdraft fees or the cost of reconnecting utilities, many people consider this expense well worth the pawn. This is meant to be a short-term safety net loan and not a repeated or long-term solution.
If repayment does not occur on time, the pawn shop has the right to sell the item to recoup from the loan. This will not show up on credit reports because the loan is based on the collateral and not on creditworthiness. Basically, the loan is considered paid when the customer surrenders the item. If the customer pays back the loan with fees and interest, they receive the item back and the pawn shop gains a profit.
Small-dollar, short-term loans are not available through banks, and payday loans are an expensive way out of financial trouble. If you owe bills for mobile phones, heat or other utilities, the pawn loan is often perfect for you. The same is true if you are just short on rent or need funds for car repairs.
Sydmor’s Jewelry and Pawn Shop is your local pawn broker in Barberton, OH. If you require short-term assistance and own something of value, stop by today and see if we can help you out.
Categorised in: About Pawn Shops
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