If you’re in a tight spot, need cash fast, or can’t get approved by a bank, a pawn loan could be the easiest way to solve your problem. For those of you who are unfamiliar with pawn loans, a little information can go a long way. Here’s what you need to know about pawn loans.
When taking out a pawn loan, you can get cash with no questions asked in exchange for leaving an item of sufficient value with the pawnbroker as collateral. Unlike banks, pawnbrokers can accept almost anything as collateral. As long as the item is worth as much as the loan you’re seeking, you should be in good shape.
The best thing about a pawn loan is that literally, all you need to qualify is something valuable to offer as collateral. You can bring jewels, watches, signed sports memorabilia, musical instruments, tools, bikes, etc.. All of these things are usually accepted as a form of collateral by a pawnbroker. Keep in mind that you will be required to provide a government-issued photo ID so the lender can verify your identity and make sure you’re of legal age.
If you need money fast and you try using a guitar as collateral with a bank, you’re not going to get anything but awkward and disapproving looks. Let’s face it, banks love paperwork that takes long periods of time and high credit scores. Of course, many people do not have a credit score that affords them the opportunity of a bank loan. That’s where short term lenders like pawnbrokers can be very beneficial.
One thing that you should know about pawn loans is that you are under no obligation to pay the money back. These loans are short-term and typically have timeframes of between 30-90 days. With a pawn loan, if you don’t pay it back, your credit score won’t be affected negatively. You will, however, forfeit your collateral for the pawn shop to sell and recoup their funds.
Just like any type of loan such as those for buying a house or buying a business, pawn loans come with risks. The biggest risk, of course, is losing the item you used as collateral. It’s really a decision that comes down to how badly you need to receive cash and how quickly you need it. For example, if you need money to cover a more important payment like on a mortgage or an auto loan, a pawnbroker is an excellent way to achieve your needed requirements.
As painful as it may be, losing your prized signed baseball card isn’t half as bad as losing your house or your car.
Aside from the risk of losing your collateral, the only other major concern that you should have when taking out a pawn loan is the interest rate. It’s important to make sure your local pawn shop is licensed to business in your state so you know you’ll be receiving an approved and legal interest rate.
Pawnbrokers offer a tradeoff between quick, convenient access to cash and interest rates that are comparatively higher than what you’d typically get from a bank.
If you can’t wait to go through the lengthy approval process of a bank loan or can’t qualify for conventional credit, taking out a pawn loan might make sense.
Here’s the bottom line, If you’re in a jam and a pawn loan is the only way you’re going to get your hands on the cash you need, then, by all means, take that prized baseball card down to the pawnbroker and get the cash you need.
If you are looking for a pawn loan, Lending Bear can help! Simply contact us today to speak with one of our friendly and professional team members.