You may have seen a lot of Pawnshops but do you really know what type of business they do? You should know that pawnshops are more than a store full of silver and gold. It’s not just the glamour of jewelleries and high end gadgets that have in store for you. As a matter of fact, you might just be surprised as to how much this simple yet elegant business can do.
01 What do they do?
The nature of any pawn store is to offer collateral loans. Here you can borrow money to pay for bills up to as much as starting a business, given that you have an equivalent item with great value to pawn. When you are then capable to pay back the amount they’ve lend with its additional interest rate, then you can get back your item pawned. Given that you did not exceed the due date for the payment. They may also do retail sales from time to time.
02 How do I get to borrow?
As what has been said earlier, they offer collateral loans. And when we say collateral loans, it means that you have to secure through an item with great value the amount that you’ll borrow. Something valuable (in monetary terms) in exchange for the money they’ll lend. This will serve as a secured payment if you cannot pay back the money you’ve borrowed.
03 By how much will I be able to get from an item?
It basically depends upon the buying rate of the pawn store and by how valuable the item is in the market. Although in general most of the pawnshops value your item by only a portion of the item’s market value. Why? Because the pawnbroker is not really buying the item for you, it’s just a physical security payment if ever you cannot pay back the amount. And this is the only way to mitigate the cost incurred from the product’s depreciation value as well as the item’s storage. But keep in mind that you can borrow to almost any amount as long as you have the right valuable item.
04 By how much is the interest rate?
Unlike other money lender, interest rate in pawnshops are usually less than the bank’s utility reconnect, credit card late or overdraft fees. For example if you have $80 pawn loan the interest would be 20% which is good for 30 days which would only cost you for about $16. Unlike the overdraft fees in bank that may even incur negative effect in your credit.
05 Are there other documents needed before I can get a pawn loan?
That is the beauty of pawnshops. As long as you have the valuable item and have a proper identification, then you’re set to get a pawn loan. There is no need to have your credit check or bank accounts or even a co-signer. Since it is a collateral loan, what’s important is you have the valuable item with you.