4 Things to Remember When Pawning
Getting a short-term collateral loan from a pawn shop can be an emotional experience. The decision to use a pawn shop is usually your last resort. Here are 4 things to remember when pawning to get you through and get you the most money.
1. Pawn Shops Give “Short Term” Collateral Loans
The reason pawn shops thrive is because they offer a quick alternative to a regular loan. It could take weeks to get approved for a loan at a bank. Pawn shops don’t have to approve or deny you. As long as your collateral is worth more than the loan you are receiving you are instantly approved.
Most pawn shop loans are a 30 day term, with the interest coming due on the 30th day. Most people who redeem do so within the first 30 days. The interest rate for a pawn shop loan can be as high as 25% so don’t be frightened by the APR that prints out. If you are going to a pawn shop chances are you only need a loan for a short time.
2. You Paid Retail Originally
The biggest shock when going to a pawn shop is what they want to pay for your items. When you have an expensive item chances are you bought it new and paid retail or close to retail for it. A lot of times the offer you get is only a fraction of what you paid.
However, remember that pawn shops are “re-sellers” and have to assume that you might default on the loan. If you default it’s up to the pawn shop to sell your item and get money for it to cover the loan. This could take months. Also, pawn shops take a big risk when accepting collateral. The item could be stolen, broken in a way they don’t know about, or even fake.
Just like a car most items you purchase new depreciate the minute you take it home. Take this into consideration before considering a pawn shop.
3. Pawn Shops Don’t Check Credit History
One of the most important things to remember that pawn shops are not financial institutions. They don’t have to check your credit history or give you a background check. The money you receive from a pawn shop is “under the radar”. Because of this you have to understand that pawn shops take large risk when giving you a loan. While most pawn brokers know a lot about the value of things they don’t know everything. They take a big risk when giving you cash for your items.
4. Pawn Shops Also Purchase
It is common practice for most pawn shops to also offer to purchase your items. If you are looking to maximize the value of your items then please consider selling them. Most local pawn shops offer you more money to buy your items because they can turn the money around faster. With a loan they never know how long they will have the money out on the street. For this reason pawn shops might offer you more to sell your items.
Remember that your local pawn shop is a business. They are in the business of short term collateral loans. And, while it may seem like they are offering you less than you think your item is worth, they need to make loans to keep money coming in. Pawn brokers like to make as many deals as possible.
by, Seth Marcus at Boca Raton Pawn
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