The Good and Bad About Pawn Loans
When you need cash quickly, a pawn shop can help. But beware of the hidden costs.
How it pawn shop : You bring in an item and the pawnbroker appraises it. You’ll be offered a loan based on its resale value, usually between 25% and 60%. You have a set amount of time to repay the loan (plus interest) and reclaim your item. If you don’t, the pawnshop keeps your item and may sell it to pay off your debt.
Pawn shops typically don’t require a credit check, but you must be over the age of 18, have valid identification and own an item worth selling. Items that are popular for pawning include jewelry, electronics, firearms and musical instruments. The amount a pawnshop offers you depends on the item’s resale value and its demand.
The bad news: The resale value of a pawnshop loan is much lower than the original purchase price, and pawnshop loans are generally more expensive than traditional or credit card loans. In addition to interest, there are also fees for pawning an item and storage.
Discover the Best Local Pawn Shops Near You
Pawnshops offer an alternative to banks, which can take days or weeks to approve financing. They can also offer fast access to money, but they can charge high interest rates and can be difficult to negotiate if you aren’t able to repay the loan. Also, if you default on a pawnshop loan it can affect your credit report. But if you’re in an emergency, a quick-cash loan can provide the funds you need.…