When you’re in need of a loan, pawn shops are a potential solution. According to Statista, an estimated 30 million Americans use pawn shops each year, providing collateral in the form of their property to secure loans. If you’re one of these 30 million people considering a pawn shop loan, then you should know these five things first.
1. Proof of Employment
While most loans have a pretty strict application process that requires you to provide proof of employment, that’s not usually the case with pawn shops. Securing a loan at a pawn shop is a lot easier than securing a loan through a traditional lending company. At pawn shops, all you’re doing is pawning off any item you think is worth something, and the employees give you a loan for how much they think the item is worth. It’s a much easier process than when you go to the bank.
2. Financial Qualification
You might have trouble getting a loan from your local bank due to your credit score or your current financial situation. With pawn shop loans, you don’t have to worry about financial qualifications when it comes to securing a loan. As long as you can provide collateral, you’re good to go.
In order to secure a loan at a pawn shop, you’ll need to provide some form of pawn. Collateral at pawn shops is typically some personal property, such as jewelry, electronics, musical instruments, or firearms. By providing collateral, you give pawn shops a way to collect their money even if you’re not able to repay your loan.
4. Loan Amounts
You’re only eligible for a certain loan amount based on the value of the collateral you provide. Generally speaking, pawn shops offer a percentage of your collateral as your maximum loan value, so you can only take out a loan up to that amount. Pawn shops are typically best for securing smaller loans that you’re going to repay quickly.
If you’re not able to repay a loan at a pawn shop on time, make sure you give them a call and ask about extensions. There are typically fees associated with loan repayment extensions, but you can at least get your property back if you’re willing to work with your lender.
There are lots of different options when it comes to securing a loan, but pawn shops can be a good option for some borrowers. This type of loan is usually easy to secure as long as you have collateral. If you’re looking for a pawn shop loan for extra cash, then give us a call and we’ll help you get it figured out.