Financial issues can happen to the best of us. If you’re looking to borrow cash with little interest rates with the least financial risk, a pawn shop loan can be an excellent option.
It offers quick financing by using valuable items as collateral. Here are six benefits of pawn loans and things to consider before taking out a loan.
Access to Cash Quickly
When you’re facing financial troubles, thoughts of selling a valuable item are common. Given the urgency of the matter, you face a high risk of underselling your item.
Pawn loans can offer you a way out of this. They offer 25% to 60% of an item’s resale value along with the guarantee of getting it back upon full payment. Pawn shops offer quick cash, saving you the hassle of dealing with potential buyers and selling your items.
No Credit Check Required
Conventional loans, such as mortgages and personal loans, require credit checks. This involves assessing your past financial history and personal circumstances to assess the risk of lending. Pawn shops, on the other hand, have no such requirements. They don’t ask for a bank statement to keep your item as collateral. All you need is your government-issued ID card, stating you’re at least 18 years old.
No Fear of Debt Collectors
If you fail to pay off the loan, your credit score will not be affected. There will be no legal penalties or trouble from debt collectors. The pawn owner will simply sell your item to reimburse the loss.
Flexible Repayment Options
If you don’t wish to lose your valuable item, you can ask for flexible payment options. Most pawn shops allow partial payment or installments. There is no fixed loan agreement, as each one of them is designed based on the borrower’s specific repayment conditions.
Variety of Items
One of the biggest advantages is the multitude of items that can be pawned. Common items with high resale value include:
- Antiques
- Musical Instruments
- Watches
- Collectibles
- Designer Items
- Consoles
Safe and Confidential
Pawn shops offer a secure way to obtain loans. These are legal entities with industry licenses and permits. Therefore, you have the right to file a complaint in case of a mishap.
Pawn shops are obliged to keep your personal information confidential under all circumstances. There is also no need to share your financial conditions or reasons for taking out a loan.
Tips for Pawn Shop Loans
If you’ve decided to pawn one or more items, here are a few things you should consider:
- Compare interest rates from different pawn shops to find the one that best suits your financial situation.
- The typical loan period is 30 days. Ask for extensions from your pawn broker if you’re unable to meet the deadline.
- Thoroughly understand the repayment terms to avoid any unfortunate circumstances such as losing a treasured item.
- Don’t lose your pawn ticket. It is the proof of your transaction and your item won’t be returned if you lose it.
- Choose a pawn shop with transparent terms and conditions and a good reputation.
