When you need cash quickly and you can’t borrow from bank or anyone else for whatever reason, where else do you turn? An increasing number of Australians are turning to pawn shop loans to get the cash they need.
You may need cash to supplement an income that doesn’t stretch as far as you need it to, or you might need cash to pay for some unexpected financial need or to complete some personal project. Whatever your reasons, your local pawn shop may be the best place to turn to.
What is a pawn shop loan and how does it work?
When you have valuable items like gold jewellery in the house you can use it as collateral for the amount of money you want to loan. What happens is that you, the borrower, will go to a lender (pawnbroker) to request a loan for a specific amount of money. The lender or pawnbroker has to work out the risk for him giving you that loan. He will make an offer and should you agree with the amount loaned, the interest and the fees, then the pawnbroker will draw up a contract specifying the terms of the agreement. Once this is signed you will get your cash. You can reclaim your valuable once the loan plus interest has been paid in full. If you fail to adhere to the terms and conditions of your loan or fail to repay the loan on time, the pawnbroker can sell your precious items.
Unlike standard loans where the lender will first determine if you can pay your loan back on time by checking your income statements and your credit ratings, pawn loans are given without such documents. All you need is a government-issued ID document.
This means you will simply walk into a pawn shop with your items, have the pawnbroker take a look at it and have a price offered. The process takes only a few minutes and if you are happy with what’s being offered you can take the cash and a receipt you will need when you reclaim your gold item. Alternatively, if you have no more use for the item, you can simply decide not to redeem it.
Why is it a good idea to get a pawnshop loan
Most people know about pawn loans but few have stopped to consider what the real advantages of such loans are.
What are the benefits of pawnshop loans?
- Pawnshop loans are an easy, fast hassle-free way of getting cash when you need it.
- There are other ways of getting cash fast. You can get a payday loan or use title lenders. These methods can be inconvenient, risky and expensive. Other lenders will make you jump through hooks for loan. They will make wait for a long period of time to get your money. No one would want that.
- Contained Risk
When borrowing money, risk is an important factor. There’s always a risk that you may not be able to the money back? Your situation might change and you may find yourself in more financial trouble. Things may take longer to get better. With pawn shop loans, the risk is limited to the value of what it is you are putting up as collateral.
If you can’t pay the loan back or decide to hand the item over to a pawnbroker you don’t have to worry about some legal ramifications or added costs. You won’t be subjected to letters of demand and calls from debt collection agents.
- No negative impact to your credit score
Not being able to repay your loans can cause hassles for borrowers. Regular lenders will report your payment history which in turn can affect your credit rating. This could make your life difficult in so many ways. Pawn shop loans are different in that they do not affect your credit score at all. These loans are simpler, cheaper and convenient. They can offer solvency into your life and finances.