Feeling strapped before payday? Is this your first time at a pawn store? Do you need cash now with no credit check required?
Pawn loans are short-term loans based on the value of a borrower’s personal property. It’s a quick and simple way to borrow money when one is in a financial crisis. Some items used as collateral for pawn loans are jewelry, designer handbags, timepieces, electronics, and musical instruments.
Financial concerns, emergent financial needs, bad credit, medical bills, identity theft, security freeze, debt collectors, late payments, current debt, and high-interest rates can all turn a good day into a bad day. Understanding how securing a pawn shop loan may be just the thing to reduce stress in your life and get you some financial protection. No need to be displayed. A pawn loan can change your day.
What are Pawnshop Loans?
Do you have an emergency and need some quick cash? All you need to do is walk into a pawn shop with a valuable item to use as collateral. At the pawn shop, the pawnbroker will determine the value of your item; you will be given a loan based on the item’s value. The lending institutions work under the rules and regulations of the state where they are located.
With a pawn loan, you’re pledging an asset as collateral when you borrow money against something you own. You can walk out of the pawn shop with cash in hand. Getting a loan depends on how much your collateral is worth.
The pawn shop will keep the item as collateral in exchange for the loan. The pawn broker will review the pawn agreement and the interest charges associated with the loan. The fees to be charged, the repayment period, and how to renew the loan should you need to will all be explained. You will walk out the door with cash in hand.
At the end of your loan term, you can claim back your item. When you secure a pawn loan, you get approximately 60% of the resale value of the item pawned. The most commonly pawned items are jewelry, firearms, precious metals, coins, motorcycles, game systems, musical instruments, vehicles, and gadgets. Name brand items may bring more money.
What you get with a pawn loan is that it allows you to sort out your cash emergency without selling the precious item. Merchandise can be returned to customers once they have repaid their loan. Alternatively, a customer may hand over their collateral in full. Pawn shops may extend the terms of their loans (where permitted by state law). The vast majority of pawn loans are repaid.
Instead of the stress you once experienced about being financially strapped, you will be able to smile knowing that you made a great decision to work with the pawn shop on the financial products they offer to start addressing your situation.
The Process of a Pawn Loan
So, what does a pawn loan entail? As said above, it is the process of handing over a precious item (collateral) in exchange for the money you are expected to pay back in a decided time.
The loans taken are usually small, but many using a pawn loan may ask for larger amounts to pay off a debt, secure medical procedures, or put down on a house.
The entire pawn loan process typically occurs as follows:
A person brings their collateral item (also known as the pawn or pledge) over to the pawnbroker, who will value it and make an offer.
Be sure to read carefully and ask any questions if there’s anything you might not understand. Before you leave the store, you should understand the agreement will involve how long it will take for you to pay back the loan and how much it will cost each month.
As a borrower, you can agree to a shorter or longer period to repay the money if you wish. Redeem the pawn any time by paying the rest you owe and obtaining the item back. If you fail to pay the loan, the pawnbroker has the right to sell the item to recover the cash.
The most typical items people pawn are a piece of jewelry, especially gold. Luxury watches, designer handbags, name brand tools are also valuable and can be used as collateral for a loan. Any items of value are considered by pawn shops and can be pawned; the best way to discover is to read up on what you can’t pawn. Anything that is too common cannot be sold for a pawn loan.
Pawn vs. Bank Loan
There is a comparison between a normal bank loan and a pawn loan. The main difference between the two loans is the amount and time an individual has to wait to get the money from a loan. A bank loan requires an application, information about creditors and credit card accounts, history on open accounts, amounts on open loans, credit history, disclosure of bad credit, credit reports, outstanding loan amounts, disclosure of auto loans, bank account balances, title loans, tax liens, collection agencies after you, and much more.
A pawn loan requires a government-issued ID, name, and address.
Pawn loans are typically short term whereas bank loans may be in place for years.
The other obvious difference is the collateral. At a bank, you won’t need to hand over an item for a loan, but you will need a good credit score to take a loan out. At a pawnshop, you exchange an item, but you do not need a perfect credit score, making it much more accessible and easier to obtain a loan. The interest rates for pawn loans tend to be higher than for bank loans. Comparatively, however, they aren’t all that bad considering payday loans, which tend to be much higher than both. An approval process is also very short in the Pawn loan is very fast compared to normal bank loans.
How Pawn loans can help during a financial crisis
When facing a financial crisis and needing a little money to solve urgent financial needs, you can take a pawn loan since you will get the money quickly.
In the unfortunate event that your credit is not good enough to secure a bank loan, you might be in a situation whereby you are under-banked. A pawn loan will help sort out your financial crisis if you do not have reliable access to financial services. It offers a quick solution to a pressing issue; you’d rather lose a valuable asset and work to buy another rather than wait it out by taking a loan you cannot pay.
Pawn loans protect the consumers’ credit ratings perspective you default, and your credit ratings remain intact; what you lose is your valuable collateral. Why is this a good thing, you may ask? Unlike a bank loan, your credit ratings go down when you default, so you miss re-credit opportunities. A pawn loan ensures that your ratings are intact, and thus you can get future businesses.
Getting a loan during a financial crisis
The pawn broker will carefully document and may photograph your valuables. They are wrapped for protection and stored in the storage area or vault, where they are secure until your loan is paid off.
When your loan balance is paid, your items are returned to you in their original condition. You may come in at any time during the loan period to pay the loan balance and pick up your merchandise without penalty. Based on the value of the item provided for collateral, the borrower is given a loan according to that value. The borrower will walk out the door with money in hand.
How a Pawn Loan benefits during a financial crisis
Loans Are Given Instantly
Pawn loans have their pros and cons. The most significant advantage of getting a pawn loan is the processing speed. Unlike bank loans, which can take up to weeks to be approved and processed, pawn loans are a get-in and-get-it situation.
With pawn loans, you must have collateral (item as security for the loan). You carry the thing to the shop and exchange it for a needed amount. The amount of loan given is a fraction of the value of your item. Once you agree on a fair amount, the pawn shop will take your article and immediately give you the cash. This becomes very reliable when you need quick cash.
No Credit Checks
The no-credit-check policy is why most people turn to pawn shops for loans. Whether your credit score is positive or negative, a pawnbroker wo, and they. They won’t even ask about it. The collateral you take with you is enough security for the loan, which means your only requirement to qualify for a pawn loan is to possess a valuable item and a government-issued ID.
The valuable item doesn’t need to be worth millions. Pawn shops deal with small loans and large loan amounts. So the golden vase in your bedroom or diamond ring will work as acceptable collateral.
Consequence If Loan Not Paid
If a borrower fails to pay a bank loan, you won’t be able to get another loan from any financial institution or lenders until you get your credit back to good standing. This is why pawn shops are the go-to options. If you fail to pay a pawn loan, the lender will presume ownership of your collateral. From there, they can sell it to cover the amount they gave you as a loan. This is both an advantage and a disadvantage. It’s an advantage because you will not have to worry about your credit rating even though you may forfeit our item.
No Tiresome Interrogations and Paperwork
One of the main issues with banks and micro-finance institutions is that they aren’t quick enough when giving loans. This is particularly true if you are in a financial crisis. A loan request process will take ages due to the number of protocols one has to follow.
It starts with pre-approval, where you need to know if you qualify for the loan. Then comes the application process, which may take days for a call-back. By the time you receive the loan, the world has already moved on! While a pawn shop also gives paperwork, you may have to sign only one contract that states your loan agreement. The contract will help them presume ownership of your item if you fail to pay back the acquired loan.
Items Are Securely Stored
Pawn shops store all collateral in a safe place, and they maintain their value throughout the loan term. This means that when you head to pick up your item, you’ll find it as you left it.
Idaho Pawn and Gold
Idaho Pawn and Gold is a full-service pawn company with three locations in Idaho; Boise, Meridian, and Nampa. They provide services throughout the Treasure Valley.
To get a pawn loan, you go to a pawnshop with something you own that you are willing to leave as collateral. The staff assesses the item’s value, condition, and resale potential and decides whether to offer a loan.
Idaho Pawn and Gold provides pawnbroking services, accepts all gold karat types, including 10kt, 14kt, 18kt, 19kt, and 22kt, and provides instant cash. If you have name-brand electronics, fine jewelry, tools, or even a motorcycle you wish to sell or pawn, stop by and walk away with the cash in hand.
Going through a rough patch, your decisions determine how you recover financially. Pawn loans are one of the alternative financing options that can give you quick cash, leaving you better than before since you get to work on repayment on your term. It is an option worth exploring.