So here we are in the wild west of the pawn industry and while all of our regular readers may know exactly what a pawn shop does, people who have never used a pawn shop might not know the specifics.
Do pawn shops give cash loans? If not, just what is it that a pawn shop does exactly?
Well, these are fair questions, particularly if you’ve never been inside of a pawn shop before.
To be clear, yes, pawn shops give cash loans.
When you take something into a pawn shop, the pawn broker will inspect the item and try to established a fair, used current value for your item(s).
They will then offer you a cash loan based on the values that they find for your items. If you agree to that amount, they will give you a cash loan, right on the spot while they hold onto your items.
When you are ready to get you items back, you will head into the pawn shop with the principle of the loan (the amount you initially borrowed) plus any additional storage and interest charges that may be attached to the loan.
For instance, if you borrowed $100 and the interest rate is 10%, then you will owe the pawn shop $110 to get your items back within 30 days.
If you happen to need longer than 30 days for instance, most pawn shops are easily able to work with you on this and in most cases, the state and local laws in your area will lay out exactly how it is to be done.
Are Pawn Shops The Best Places For Cash Loans
If you ask me, there is just about no better place to get a short term cash loan than a pawn shop.
First of all, the cash loans you get from pawn shops are among the most affordable of any cash loan option available to you.
They are typically much less expensive than your typically payday loan or cash advance loan for instance – and are far more so than many of the other ‘Consumer loan’ instruments on the market that most check cashing places will try to sell you on.
Additionally, when you get a cash loan from a pawn shop, you are taking out what is known as a no-recourse loan. That means that if you default on your loan or are unable to pay it back for whatever reason that the pawn shop can’t turn around and sue you later for that.
Additionally, a cash loan at a pawn shop is a secured loan. What that means in that your credit report isn’t involved at all.
So even if you have no credit or bad credit, you can still get a loan at a pawn shop without a problem because it is all based on the merchandise that you take into the pawn shop to begin with.
Additionally, if you default on the loan, it’s not going to go against your credit report either. Cash loans from pawn shops have nothing to do with your credit history and won’t affect you or come back and bite you in the butt later down the road.
Are Cash Loans From Pawn Shops Safe
Absolutely! Cash loans from pawn shops are completely safe.
You have to understand that these days, pawn shops are tightly regulated by state and local laws that govern exactly how they are to operate.
Additionally, pawn shops are regularly inspected to make sure that the shop is operating according to the law and treating their customers exactly how they should.
If you’ve heard stories about something a pawn shop ‘Did’ – normally these stories are blown way out of proportion or are from 50 or 60 years ago and really don’t apply to how pawn shops operate today.
Virtually every pawnbroker that I’ve ever worked with is always an ethical person that just wants to run and operate a good, clean, honest business that helps the community that they are in.