by
Karla Lopez
|
March 16, 2021
Financial emergencies can come at various sizes at any given time. And when they do, it’s
either you are financially prepared or desperate to get a quick cash. If you belong to the latter
and don’t know where to go, pawn shops are one of the places that you may want to
consider. However, you’ve probably heard or read from somewhere that it is not such a good
idea.
Like any other loan options, getting a loan from a pawn shop comes with some ups and
downs. But as long as you know how and when to use it appropriately, a pawn loan has more
advantages than you can ever think of.
If you have high-value items and you’re looking for a temporary solution to patch up some
financial difficulties, a pawn loan is worth considering. But before you make any decision, it
would be best to learn about the top advantages offered by these loans.
Most banks and other financing institutions run a credit check when you apply for a loan. If
you have bad credit, you’re less likely to get approved. That would be frustrating, especially
when you need quick cash to cover an immediate expense. If that’s the case, a pawn loan
might be a better choice for you.
Because they have a no-credit-check system, you can get the funds that you need whether or
not you have stellar credit. Even if you’re unemployed, you’ll qualify for a pawn loan as long
as you provide a valuable item like watch or jewelry as collateral, while other types of
installment loans may be more difficult to qualify for without proof of employment. It’s worth
noting though, that the amount of loan you’ll acquire depends on the value of your item.
There are other bad-credit or no-credit-check loans, such as payday or title loans. However,
a pawn loan can be much cheaper when you need fast cash. Although interest rates and fees
may vary, because pawn loans require collateral to secure, the fees and interest can total less
than other types of loans.
But it’s worth pointing out that lenders charge rates relative to the size, collateral, risk,
recourse and duration of the loan. What’s more advantageous is that there are no hidden
charges with pawn transactions.
Unlike conventional loans that can take weeks for your application to be reviewed and
approved, a pawn loan makes it possible for you to get the cash you need right away. You
don’t have to wait for a long time to process the fund.
All that is required is you pledge a collateral and wait for the pawn shop to assess its value.
Once you accept the amount they will offer you based on their assessment, the pawn shop
will take your item and grant you the cash instantly. There are no credit check, bank account
or other usual requirements in a traditional loan.
Note that the items you can pawn may vary by store and location. But the most in demand
items include the following:
● Jewelry
● Cameras
● Electronic Gadget
● Musical Instruments
● Firearms
Taking out a loan of any kind entails responsibility. As much as possible, you have to make
payments on time. But sometimes unexpected circumstances happen, causing you to delay
or even miss your loan payment. If you get the loan from a bank, credit union or other
lenders, such late or missed payments will display on your credit report.
Since pawn shops don’t deal with credit checks, your loan won’t have any impact on your
credit rating. In case you fail to pay back your pawn loan, you won’t be referred to collection
agencies or pestered by creditors. Pawnbroker simply claims ownership of your pawned item
and most likely sells it to recover cash for the loan you did not pay.
Another advantage of getting a pawn loan is the ability to take out as many loans as you want
and need. Other lenders aren’t that flexible. Most of the time, they will not approve loans until
you pay off the previous one. But with a pawnbroker, you can get multiple loans even each
day of the week.
Of course, you’ll need to bring with you a new collateral for every pawn loan request. It’s also
worthy note that your initial loan on the same pawnshop must be under your paying capacity.
Otherwise, they may not be that lenient and helpful to extend you the loan even if you have a
new collateral.
You can benefit in many ways with taking out a pawn loan. But like other loans, it may not be
the most appropriate solution all the time. Remember that pawn loans work best on short-
term financial difficulties. If you need a large amount that requires a long-term repayment,
you may have to look for other options.
