What Are Pawn Loans And Should You Get One?
What are pawn loans? Are they different than selling your items to a pawn shop? Learn the ins and outs of pawn loans so you know if they are best for your needs. If you need a loan, a pawnbroker can be of great assistance.
What pawn loans are
Pawn loans are special loans given to people in exchange for an item. Basically, you go into a pawn shop and speak to a pawnbroker about being loaned some money. You explain the amount of money you need and your pawnbroker asks you to show him or her what valuable item you have to exchange as collateral to secure the loan. The item in question has to be of greater value than the loan amount.
When you agree upon a loan amount, your pawnbroker takes your collateral item — often a piece of jewelry, sports equipment, a tool, or another item of value — and places it in the back of their shop. When you pay your loan back in the agreed-upon time frame, you get your item back.
Should you consider pawn loans?
If you need cash, pawn loans are an excellent way to get the money you need. You have to have something of value to take into a pawn shop to get pawn loans on, and you cannot take out more than one pawn loan on a single item at a time.
Pawn loans are great for getting a loan without mega high-interest rates or without doing a credit check, but keep in mind that any cash pawn loans you take out you have to pay back. If you don't pay your pawn loans back, you will lose the collateral put in place for the loans and may be banned from ever making a loan at the pawn shop again. Your pawnbroker will explain to you the purpose of your cash loan and any risks associated with it before you sign your loan contract.
You may pay off your cash pawn loan at any time so you can get your items back, but it should be fully paid off before any agreed-upon date. Your pawnbroker will let you know what items they accept for pawn loans. You may also agree to outright sell your items to a pawn shop for cash, although in doing so you cannot get your items back. Keep this in mind as you decide whether pawn loans or pawn sales are best for you.