Skip to main content
Blog

What is a pawn loan?

By July 15, 2021No Comments

If you’ve never used a pawn shop to obtain a loan before, you may have a lot of questions. This process does not work as it does on TV or as some people think. Understanding how this works can help you get the necessary information about pawning your items. The following is an overview of the pawn process.

Pawn shops usually sustain two lines of business. One is secured loans against goods, and the other is buying goods from customers.  They may be experts in jewellery, antiques, or other valuable items commonly used to secure loans.

In order to obtain a loan, the customer brings an item, and we give it an estimated value. From there, we determine the loan amount. The item stays with us until the customer repays the loan with additional interest and expenses.

Loans only need photo ID and a valuable item. There is no credit check requirement. If customers don’t want to borrow against their goods, they can sell them. This way they do not have to collect them, because it is the final sale of the merchandise.

 As indicated earlier, the amount of the loan is determined by the value of the item. In the form of a loan, it is usually set to around 50 to 60% of the value. That way a sale will recoup the costs of the loan and any interest. This takes into account the expense of storage, security, and the item’s demand. The average pawn loan is $150, while higher amounts are possible with more valuable items.

Interest rates are typically around 25%. Your interest would be $20 if you borrow $80 at that rate. Many consumers believe this payment to be well worth the pawn when compared to bank overdraft fees or the cost of reconnecting utilities. This is meant to be a short-term safety net loan and not a repeated or long-term solution.

If the loan is not repaid in a timely manner, the pawn shop has the right to sell the property to reclaim the amount. Because the loan is based on the collateral rather than creditworthiness, it will not appear on credit reports. When the consumer surrenders the item, the loan is effectively paid off. If the customer repays the loan with fees and interest, the item is returned to them, and the pawn shop gains a profit.

Banks do not offer small-dollar, short-term loans, and payday loans are an expensive route out of financial problems. If you owe payments for mobile phones, energy, or other utilities, a pawn loan may be ideal. It’s the same if you’re just short on cash for rent or car repairs.

Buyback Loans pawn shop is your local pawnbroker in Pimpama. If you require short-term assistance and own something of value, stop by today and see if we can help you out.

Leave a Reply