What is a pawn loan?
A pawn loan is a type of short-term loan that you can get from a pawn shop by using your valuable items as collateral. You can borrow a percentage of the value of your items and pay back the loan plus interest and fees within a specified period of time, usually 30 or 60 days. If you pay back the loan on time, you can get your items back. If you don’t, the pawn shop can keep your items and sell them to recover their money.
Why do people use pawn loans?
Pawn loans are a convenient way to get some quick cash when you need it. They don’t require a credit check, a bank account, or a lengthy application process. You just need to have some items that the pawn shop is willing to accept and appraise.
According to the National Pawnbrokers Association, there are about 11,000 pawn shops in the US that serve over 30 million customers annually. Pawn loans are often used to cover unexpected expenses, such as medical bills, car repairs, or rent.
What happens if you fall behind on your payments?
In the case that you fall behind on your pawn loan payments, you may find that a pawn shop will be willing to give you a grace period so that you can get your items back.
Let’s just face some facts about pawn shops and their loans. When someone comes into a pawn shop to make a loan, they aren’t there because they are having a great day or things are awesome financially. By the very fact that they are in a pawn shop getting access to cash immediately, it means that they’ve had something come up that they weren’t expecting or they just don’t have enough money to cover the bills that month.
There’s nothing wrong with that, it’s very common. And there’s nothing wrong with the people that use pawn shops. We’ve all had a period of financial hardship in our lives and we do whatever we have to do to get through it. For some of us, that has meant using a pawn shop from time to time.
That having been said, just because someone makes a short term loan at a pawn shop doesn’t mean that all of their financial woes are forever solved. Typically speaking, people experience these periods of financial hardship for at least a few months at a time.
What that means is that sometimes, just keeping up on the monthly interest (and maybe storage) payments on your pawn loans can be difficult when money is already tight. Or maybe money isn’t particularly tight at the moment, but you just forgot when your payment date was.
You might be panicked, worried that a pawn shop is now going to keep what you made a loan on. However, maybe, just maybe, they will give you a grace period to come in and pay that loan back or catch up your past payments? Is that something they even do?
How do pawn shops handle grace periods?
A lot of people get behind on their bills, but when you are behind on your pawn payments, do pawn shops have grace periods? In a lot of cases, pawn shops will work with you to make sure that you don’t lose your items but this will vary from pawn shop to pawn shop.
The first thing that we have to get out of the way here is to understand that pawn shops are owned by thousands of individual, small business owners with their own policies regarding these matters. What one pawnbroker does may be completely different from what another will do.
With that in mind, almost all pawnbrokers understand that things happen in life. Sometimes you can be on your way to the pawn shop to make your payment and you get a flat tire, or get into a car accident (hopefully you’re okay if you did!) They are humans, just like you.
For this reason, some pawn shops will build a 2-3 day grace period into their software by default for all customers. That’s some, not all, keep that in mind. Others will give you a little extra time if you simply call them and let them know what your scenario is. Like I said above, they are humans just like you, they know what life is like.
You’re much more likely to have this work in your favor with small, individual pawnbrokers. Chains of pawn shops are less likely to do this, and there’s a few reasons.
Why some pawn shops won’t give individual grace periods
As I mentioned above, some pawn shops build default grace periods into their software. Others will give individual exceptions. However, this is a dangerous practice, legally speaking.
The reason is that the pawn shop can be accused of showing “favoritism” for certain customers over others, not treating all of them fairly. This is a real liability that pawn shops have to be aware of as technically, they are a financial services business, not a retail business as you might have expected or thought that they were.
So, in these cases, if the pawnbroker in question has previously had a problem with this, or it is a chain that eliminates this fear at a top level, you may find that the pawn shop will not offer you any kind of grace period.
It’s not you, it’s them
What you really need to understand about this is that it’s not personal. The pawn shop is not trying to be mean or unfair to you. They are just following the rules and regulations that govern their business. They have to protect themselves from legal troubles and financial losses.
That’s why it’s important that you read and understand the terms and conditions of your pawn loan before you sign it. You should know exactly when your payment is due, how much interest and fees you have to pay, and what happens if you don’t pay on time.
You should also keep track of your payment dates and receipts. If you have any questions or concerns, you should contact the pawn shop as soon as possible and try to work out a solution. Most pawn shops are willing to help you if you are honest and respectful.
The bottom line
Pawn shops have grace periods for some customers, but not for others. It depends on the state law, the pawn shop policy, and the individual situation. If you want to avoid losing your items to the pawn shop, you should pay back your loan on time or before the grace period ends. If you need more time, you should communicate with the pawn shop and see if they can accommodate you. Pawn shops are not your enemies, they are just businesses that provide a valuable service to people who need cash fast.