Pawn shops are an interesting business. They make loans on valuables but they aren’t your typical sort of loan. They are a secured loan and won’t go against your credit record if you default on them. That’s what really makes them unique when compared to other businesses like them.
But what about other types of loans? For instance – will a pawn shop make a “Title Loan” against your vehicle or will they make a “Payday Advance” or “Cash Advance” loan as well? Good question!
The answer is – Sometimes. It really depends on how that pawn shop is setup.
Typically speaking ‘Cash Advance’ loans are otherwise known as ‘Payday Loans’ and some business do both pawn loans as well as payday loans.
Of course, it doesn’t just stop there.
Some business offer those two different loans in addition to other services like check cashing, Western Union, etc.
All of those things fall under the same basic umbrella of ‘financial services’ so it is common that they get combined to varying degrees.
That having been said, it is still not the best idea to think of all of these things the same way.
There are important differences that you should be aware of.
What’s The Difference Between Pawn Loans And Cash Advances?
One question that I get a lot is about what the difference is between pawns and payday loans.
The reality is that while they both can provide you with some quick cash, they actually couldn’t be much different.
A “cash advance” payday loan requires you to have a checking account and often some kind of credit history as well. You want be able to get the loan without one or both of these things.
A pawn loan just requires that you have some form of ID and an item of value that the pawnshop is willing to take in. You don’t need a credit check or a banking account.
For these reasons, pawn loans are the much simpler and often much easier option of the two.
Which One Should You Use?
Picking between these two loans will depend on a variety of factors.
- How comfortable are you with their repayment terms?
- Do you have an item of value that you can use to make a pawn loan against?
- Do you have the checking account required to make a payday loan?
You will have to look at all of those things a decide for yourself which is the best loaning option for you and in that particular situation.
The Nerd’s Experience
People seem to get these two types of loans mixed up and confused all of the time. If you aren’t sure what type of loan options your local financial business offers, call them and ask.
The easiest way to keep cash advances and pawn loan separate in your head is just to remember – a pawn loan means that you left something there to come back and get it later when you repay the loan. If you didn’t leave something behind, you probably made a cash advance loan instead.
My personal preference of the two loan types is a pawn loan because of it’s simplicity. However, there are situations in which the individual involved just doesn’t have enough value in the items that they want to pawn and therefore must make a cash advance loan instead.
There’s nothing wrong with either loan options.
That About Does It…
If you have any questions or comments then please go ahead and leave those in the comment field below. I’ll be happy to answer them as soon as possible.
Thanks as always,
The Head Nerd