There’s something very lucrative about pawn shops- quick cash, low rate of interests and a loan over an item that can be easily used as collateral. Pawn shops cause the least harm when it comes to credit collection, spoiling your credit score and they are very handy when you have exhausted all other options to get some fast cash for your urgent needs. In this article we will be exploring together- what are pawn shop loans, what are their downsides and upsides and are they even worth it.
Let’s talk about interest rates of A New Hocke Pawn Shop in North Miami Beach. To some they may seem like a lot going around at the rate of 200% APR. However, when compared to other sources such as payday loans or even car title loans which go as high as 400% APR, pawn shop rates are quite lucrative and reasonable.
Pawn shop loans- how do they work?
Here are the following steps involved in getting a loan from a pawn shop.
- You go to a pawn shop with an item that you own and want to secure a loan out of. The pawn shop staff assesses the condition of the item, its value, its resale value and then makes the decision of whether or not to offer you a loan based on the item.
- Once you accept a loan along with its terms and conditions, you are issued a pawn ticket which contains all the terms and conditions as well as serves as the receipt of the loan.
- Credit checks are usually required when there is no collateral, however in your case it is not required. You must be 18 years of age and above and must show a valid identity proof. They will also ask you relevant questions to ensure you are the owner of the item and you will also be required to produce valid documents that state the same. You must remember that all licensed pawn shops are in regular contact with the law enforcement agencies, and you must at no time involve yourself in illegal activities to avoid charges.
- Some shops specialize in certain items like gold or antiquity, and you must get your loan from such a shop since you will have no problems in getting the value of your item ascertained.
- The duration of a loan from a pawn shop varies from 30 days to a couple of months. In this duration you are required to pick up your item and clear off your loan. There sometimes exist additional fees which include insurance and storage charges. In case you are unable to repay the loan, some shops allow you an extended term or a relief in the terms. However, when this time too passes, they are fully entitled to resell it.
- According to several reports and pawn shop owners, an average loan of $150 is extended and must be repaid within 30 days of borrowing.
The downsides of getting a loan from a pawn shop
- Pawn Shop loans are ridiculously expensive. Experts suggest that when the APR is about 36% or below it, only then a loan can be qualified as affordable. However, between the fees, convenience charges and interest, the APR for pawn shop loans can run from anywhere between 200- 400%.
- There is a good chance that pawn shop loans are hardly repaid- the statistic stops at $15.
- If you are borrowing against the same collateral and repeating the process, it is quite possible that your loan requirements are much larger than this and you must take active actions to course correct your financial health.
The upsides of Pawning goods,
- If you are unable to qualify for a loan and have exhausted all your other options, then pawn shop loans are the best.
- If you compare it against the late fees of credit card repayment or a reconnect fee for utilities, it is way cheaper.
- Although they cost more than traditional personal loans offered by companies, you can get the money faster without the need for a credit check.
- You will neither be sued or pursued for repayment of the loan in addition to no impact on your credit scores. You will only lose the item you took the loan against if you don’t repay the loan and additional interest and fees. Learn more about A New Hocke Pawn Shop, via this Haiti Open Magazine business profile.
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Last modified: July 30, 2021