Pawnshop loans are a great way to get quick cash

Our car could break down at any time, or your air conditioner might stop working on the hottest days of the year. You’ll need to scramble to find the money to pay for the garage or repairman.

You might be interested in pawnshop loans if you are short on money and do not have enough savings to cover an emergency.

While pawnshop loans are convenient, they can be expensive — although not as expensive as pay day loans.

What you need to understand about borrowing money from a pawnshop without losing your property or spending too much.

How does a pawnshop loan work?

According to the National Pawnbrokers Association (NPA), pawnshop loans average $150. A pawnshop may be the best option for you if you are looking for a small short-term loan, but don’t wish to have your credit checked by a lender.

If you are looking for a pawnshop in the U.S., it’s worth checking if they belong to the NPA. The NPA has adopted a code and best practices to maintain the professionalism and reputation of the industry.

How to get a loan from a pawnshop:

1. Take a valuable object you own to a Pawnshop.
2. Staff will evaluate the item’s condition and potential for resale to determine its value.
3. You may be offered a loan between 25% and 65% of an item’s resale price.
4. You will receive the money and a ticket if you accept the loan. Keep the ticket and don’t let it go. To get your item returned, you’ll have to show the ticket to the store.
5. Return to the store within the agreed upon time period, which is usually 30 days or several months to collect the item. You will pay back the loan plus interest and fees. These charges vary from state to state. Some states cap pawnshop rates.

You could extend the loan and pay higher interest and fees. You can also choose to not pay back the loan. The shop will still keep your item and the transaction will be complete. Because the pawnshop keeps the collateral, it won’t report your credit to the bureaus or send collectors after you.

What will the cost of a pawnshop be?

This is an example of the fees and interest charged by pawnshops.

Imagine you want to pawn your smartphone. The pawnshop will offer you $100 plus a 20% charge ($20) after assessing the value of your smartphone. You will be owed $122 when you pay back your loan.

If you want to extend your loan, the $122 becomes the new principal and the shop charges the same interest as before.

According to Nolo.com, the interest and fees charged by pawnshops could be equivalent to paying rates of interest up to 240%.

This is a steep interest rate, but not as high at the 400% effective interest that payday lenders typically charge.

You can still find a better option than a pawnshop, even with bad credit. If you have no or a very low credit score, then you may be eligible for a personal loan, with interest rates ranging from 6% to 36%.

Credible allows you to compare loan rates quickly and receive personalized loan offers.

What can I pawn to get money?

You’ll need to provide collateral that the business can hold onto while your loan is in progress.

Pawnshops may accept items such as jewelry, coins, high-quality firearms, musical instruments, vinyl records, or vintage turntables, or brand-name digital camera gear, or the most recent electronic devices, like smartphones, laptops, or tablets.

Rarely will they accept toys, old technology or damaged items. If you are unsure, ask ahead if the shop will accept it.

If you are unable to pay back your loan, the pawnshop may keep and sell your item.

Pawnshop loans pros and cons

Pros:

• The pawnshop will not report your credit history to the credit bureaus.
• You can simply walk away from your loan.
• Pawnshops provide small loans that are useful if you’re in a hurry, but won’t cover large expenses like a medical bill.

Cons:

• Interest rates are high — higher than those on a Personal Loan.
• If you don’t pay back the debt, you could lose something that you own.
  

Visit a Pawnshop as an Alternative

If you are in need of cash quickly, these alternatives to pawnshops may be a better option.

• Ask your employer for a cash advance or payroll advance.
• You can ask for a grace time for a bill.
• Open to a credit card that offers 0% on balance transfers.
• Even if your credit is bad, you should consider a personal loan.
• Sell an item of value through regular channels such as eBay, or if it is a car, to a used car dealer.
• You can ask for help from your family and friends.

If you find yourself in a financial bind, a pawnshop can be incredibly helpful. However, there are other options available that may cost less — or even nothing.

This company can help almost anyone get rid of credit card debt

Do you find that paying off your credit cards is a never-ending chore with no apparent end? You are not alone. Personal loans offer lower rates as well as fixed payments. This makes them a good choice for consolidating high-interest debt. It simplifies payments and speeds up debt repayment.

Fiona shows you how to save money on interest by paying off your credit cards quickly.