A pawn shop loan is a short-term, secured loan. That means you get some quick cash in return for collateral. What you use for collateral is up to you and the pawn shop broker. You could use, for example, a smartphone, valuable coins, musical instruments—whatever the pawn shop is willing to take.
The most important thing is that you pay back the loan on time and with interest as per the agreement you come to with the pawnbroker.
Let’s look at our leading tips on how to do a pawn shop loan.
Are pawn shop loans legitimate?
Pawnbrokers will typically provide a percentage of an item’s value as a loan. Then you’ll have between 30 days and a few months to repay the loan and receive your item back. The average pawn shop loan is $150, though you can get loans for considerably more than this if you have adequate collateral.
While pawn shops have gotten a bad rap in the media, the fact is that pawn shop loans are highly regulated. There are 15 federal laws applicable to these loans to ensure customers are protected. Then state and local laws manage the details of these transactions including interest rates, loan durations and record keeping.
How to do a pawn shop loan
As mentioned earlier, typically, a pawnbroker will lend you a percentage of the item’s resale value; however, this percentage can vary widely (between 25 and 60 percent), so it pays to shop around and find the best deal.
If you accept a pawn shop loan, you leave with cash in your pocket and a pawn ticket. This ticket is very important, as you’ll need it to get your item back. It’s best to take a photo of the ticket to keep on your phone to ensure you have it.
These loans do not require a credit check because you left a valuable item with the pawnbroker who can sell it if you fail to pay back the loan. You will need to show ID and be eighteen years or older to obtain a pawn shop loan.
You then agree to pay off the loan in a specific time frame, usually between 30 days and a few months, as well as any fees and interest. These additional charges vary by state.
Benefits and drawbacks
If you’re unable to qualify for a conventional loan, a pawn shop loan can step in to provide quick cash. You’re able to get the money fast. Plus, there’s no legal requirement that you have to repay the loan, so your credit score won’t suffer and the loan won’t go into collection.
On the other hand, high interest rates are associated with these loans, and if you fail to pay off the loan, you’ll lose whatever valuable item you used as collateral.
Are you looking for a full-service pawn shop? Then check out everything Sydmor’s Jewelry and Loan has to offer. We buy a wide array of items at fair market value—which means cash in your pocket. Give us a call or stop by our shop today.
Categorised in: Pawn Loan
This post was written by Writer