When you pawn an item in exchange for a loan, you’re accepting what’s known as a secured loan. This means that the money that the pawn lender is giving to you is secured by the value of the item that you’re putting up as collateral.
If you’re pawning an item, you may be wondering what impact your pawn loan in Barberton, OH will have on your credit score. After all, it’s very important that you maintain a credit score that’s as high as possible. You may also be worried that a low credit score will impact the terms associated with your pawn loan.
Thankfully, you won’t damage your credit score at all by accepting a pawn loan. You also, however, won’t be improving your credit score. Because pawn loans are secured, they have no bearing on your credit score whatsoever.
People tend to confuse pawn loans and payday loans. It’s important to know the difference between the two, so that you know which lending product is right for you and your situation. Here are some of the key points that distinguish pawn and payday loans from each other, including the way they impact your credit score:
- Pawn loans don’t affect credit score: Pawn loans will never, ever impact your credit. If you fail to pay back your loan, then the pawn shop will simply reclaim your item. This means you don’t have to worry about wrecking your credit if something comes up and you can’t keep up with the payments.
- Pawn loans have lower interest rates: Compared with payday loans and other rapid lending products, pawn loans have dramatically lower interest rates. This is because issuing the loan is less risky for the pawn broker. Even if you can’t repay the entirety of the loan, they still control the collateral you left.
- Pawn loans offer longer payback times: Most pawn shops also offer much longer payback times compared to payday lenders, who usually demand rapid repayment of the loan. Each state regulates payback periods differently, so it’s important to talk to your local pawn broker about their terms and conditions.
- Pawn loans are never sent to debt collectors: Unlike payday loans or even bank loans, you’ll never be sent to a debt collector if you default on a pawn shop loan. This is because the pawn broker already has your secured collateral on hand. If you aren’t able to pay, they’ll simply claim and sell the item that you’ve put up to secure the loan.
Since 1949, Sydmor’s Jewelry and Pawn Shop has been the premier provider of pawn loans in Barberton, OH. We’re proud to provide our clients with dependable and reliable lending services. We follow all state and local regulations related to issuing pawn loans. We boast a community reputation going back more than six decades. Our conveniently located store also sells a wide range of essential goods. You can count on us, whether you’re looking for quick lending services or an affordable place to shop for tools, guns and more.
Categorised in: Pawn Loan
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