Want to know more about how a pawn loan works? The idea of pawning something precious and of value might seem daunting if you’ve never done it before. But with this quick guide, we can walk you through the ins and outs of how pawnshop transactions work.
This might be you: you need money but you’re still in the process of building your credit score. Using a credit card is out of the question as well.
If this is the predicament that you’re currently in, then borrowing money through a pawn loan might be your best option.
This allows you to secure the funds that you need without lengthy applications to fill out and uncomfortable credit checks.
But the main requirement for taking out a pawn loan is by offering collateral first. This could be jewelry, sports equipment, electronic gadgets, or just about anything of value that you may have. The lender will simply appraise the collateral you present and then offer their valuation of the item.
What’s great about this type of loan is that it doesn’t require lengthy documentation and you can get the cash on the spot—it’s quick and easy.
A pawn loan is a collateral-based loan. This means that you offer the lender something of value in exchange for cash. The lender will then keep your collateral until you have repaid your loan.
Here’s how your transaction might go:
1. You offer your item for valuation
Lenders will ask you to bring in your item so they can physically inspect it and offer you a fair valuation.
2. Your lender will make an offer
If the appraisal of your item goes well, the lender will then give you an offer for the item.
Remember: the loan amount will not be equivalent to the actual value of your item. It will only cover a percentage of the actual value.
3. You either accept the offer or not
Yes, you have the option to turn down the offer. However, if you accept it, you will then be asked to surrender your collateral for safekeeping. You will be given the item back once you have completed your payment with your lender.
Here’s how you can repay your loan:
1. You can pay your balance in full
Your first and best option is to pay back your lender the money that you owe. You can do this within the term of your loan, which is generally 1 month after your initial transaction.
2. You can transfer ownership of the collateral to your lender
If you can’t pay back the amount that you owe, you can also allow the lender to keep your item. This will not reflect on your credit score nor will there be any excessive collection action done. You will, however, lose your item as a result.
Alternative option: if you want to keep your item but don’t have the money right now, you can also apply for an extension of your loan. This requires you to pay a portion of your outstanding interest.
Do you need cash now? Are you sitting on some items that you can pawn? Lending Bear can offer you the best upfront rates and quick transactions.
With a pawn loan, we’ll keep your items safe and secure until you can pay off the loan. Simply bring in the item for appraisal and we’ll give you our best offer right away. No need to haggle with our associates as we’ll offer a fair price right up front. Contact us to learn more about our pawn loan process today.