Today, most Americans require a short-term loan that is not available from conventional lenders, credit cards, and banks. Ever watch the show Pawn Stars? These people come from every walk of life and often look to a pawn loan to ensure securing some money. The new-age pawn stores are clean and cater to American customers. Even then, many people are unaware of the way pawn loans work.
The economy is in a constant flux state, and people are looking at pawn stores for the money they need. You must opt-in for a licensed pawnbroker. Yet, you need to know a few essential things while opting in for a pawn loan. The following pointers can help:
- What is a pawn store?
A pawn store is all about making collateral loans! The pawn stores provide loans, which get secured by a valuable item. The pawn store might have various other business aspects, like retail sales. The pawnbrokers also concentrate on lending money.
- How does the pawn loan work?
The customers bring a valuable item, and the pawnbroker provides a loan depending on the object’s percentage. The pawnbroker possesses the item till such time the consumer repays the entire loan amount with interest. There might be some extra fees that might apply. The pawn stores get regulated on the state, local, and federal levels.
- How much cash can you get for your valuable item?
On average, the customers get only a fraction of the valuable item’s retail value. You need to know that the pawnbroker is loaning out money based on the item and not purchasing it. The pawnbroker needs to consider the storage cost, future demand, and security of the thing. They also consider the resale value of the item just in case the loan doesn’t get repaid. The average loan amount is usually $150. But the loans can get made for any amount, based on the pawned item value.
- What is the interest rate you need to pay on a loan?
The interest rates differ from one state to the other! The amount is generally less than the bank overdraft fees, credit card late fees, and the utility reconnects fees. For instance, an $80 pawn loan for 30 days at 20% might cost you $16. You can compare this with a credit card late fee or overdraft fee that can negatively impact your credit.
- What should you do to get a pawn?
If you want to get a pawn loan, all you need is a valuable item and proper identification. The pawn loans don’t need any credit checks, co-signer, or bank account.
- What happens when you don’t repay the loan?
When you don’t repay a loan, it can’t impact the customer’s credit scores. The loan gets based on collateral, which is an original property. Hence, when you hand over the item to the pawnbroker, the loan is considered paid.
These are a few aspects that you need to know about a pawn store before you opt for a pawn loan.