If you're looking for some cash quickly, your local pawn shop can assist. Pawnshops lend money to people using the valuables as collateral. Most pawn shops accept a wide variety of collateral.
A pawn shop will generally give less than the full value of the goods so that they can sell the item for a profit should the customer not return to repay the loan. Some of the most common items to pawn are jewelry, electronics, and musical equipment. Items being pawned generally fetch between 25% to 60% of the item's resale value.
Pawnshop owners have noted that more and more people are visiting pawn shops these days, looking for short-term cash solutions, without having to sell up their lives. The declining economy has resulted in more and more middle to upper-class customers seeking to sell items or obtain short-term loans.
What attracts consumers to pawn shop loans?
Pawnshops offer customers a quick and convenient way to borrow money. It is a short-term solution for cash flow problems with no credit checks being involved. Pawn loans will never cause people to go into bankruptcy or overextend credit unjustifiably as it imposes a discipline on the borrower that a traditional bank will never compete with.
As the risk of a person defaulting on a pawn loan is extremely high, pawnshops generally charge substantially higher interest rates than a bank. Many individuals who opt to take a pawn loan can not qualify for a bank loan. Interest rates charged by pawnshops are regulated and vary from shop to shop, but generally range from 5 to 25%.
How much can I expect to loan on my item?
When it comes to the amount that a person can borrow against an item, in most cases pawn shops will not lend more than 25 – 50% of the projected resale value of the item put up as collateral. The reason for this is because the pawnshop broker has to factor in costs for storage, cleaning, general overheads, and advertising.
How to determine the value of an item
A pawn shop will base the value of an item on its current condition, and appraised value as well as the potential to re-sell the item. Most pawnshops have a variety of research tools available to determine the value of specific items. A pawn loan can be a great help for short-term cash flow problems.
In general, you can expect a pawnshop to not lend you more than 50% of the projected resale value of your item and charge between 5% to 25% interest on the loan.