With more and more families today needing money in order to pay for their needs, the importance of pawn stores as a way to secure loans has significantly increased. Thousands upon thousands of people are now seeking the help of pawn stores everywhere in order to acquire short term or small dollar loans.
With many pawn stores becoming more prominent especially after the success of the History Channel series Pawn Stars, it has now become more important for you to know what exactly happens in a pawn shop and what you should expect when you go to one. We at majorpawn.com believe that as a person who wants to go to a pawn shop in order to get financial assistance, you should first know what exactly you are dealing with. You should have an idea as to what a pawn shop does and how loaning with them works.
We have compiled this list of frequently asked questions about the inner workings of a pawn shop. We hope that you can keep the answers in mind when you visit one in your area:
• What does it do?
Pawn ShopThe main idea of a pawn shop is to offer an option for people to get loans in exchange with something that has value. Basically, a pawn store would loan you money around the same amount of the value of the object that you are trying to pawn. Although there are a growing number of pawn stores in the country that have a retail element included in them, the main focus of almost all pawnbrokers has always been lending money in exchange for valuables.
• How does it work?
Every single pawn store in the country is regulated by many federal and state laws. They are licensed to accept items of value in exchange for an amount that they will loan to the one pawning the items. The value of the item and the consequent loan amount is determined by the pawn broker’s staff. The shop will keep the item until the money is repaid complete with the fees and interest.
• How much money can a person get?
The amount of money that you can get from loaning an item to a pawn store would depend on the worth of the item itself. When loaning, however, do not expect that you will get the full retail price’s worth out of the item you are pawning. The pawn store is simply loaning you the money, rather than purchasing it from you. Therefore, they consider storage costs, security costs, as well as the potential demand for the item. They also consider the resale value of the item, in case you are unable to pay your loan back. On a national level, the average amount that you can get is approximately $150, although again this can vary depending on the item.
• What interest rates should I expect?
PawnShopThe interest rate will vary depending on which state you are in, but these are typically less than the overdraft fees you encounter in banks or the credit card late fees and utility reconnect fees. For instance, if you loaned $80 at 20% and you have been given thirty days to pay, expect that the interest would be around $16.
• What do I need in order for me to request for a loan?
It is very easy to get a pawn loan. There is no need for you to sign anything or to have a credit check before you go to a pawn store to request for your loan. All you need to bring when you go to the pawn store would be the item that you are going to pawn and the rest of your transaction would depend on the worth that the pawn store decides to give the valuable item you have brought.
• What happens if I am not able to repay?
If you are unable to pay your loan, the most obvious thing that would happen is that the item you have given to the pawn shop will be considered as sold to that pawn shop. Loans given by pawn shops are guaranteed by the actual items that can be sold or can serve as collaterals. Non-payment of the loan or the pawn amount would forfeit your ownership of the pawned item, as if you already sold it to the shop. However, failing to pay your loan will in no way affect your credit scores.
Pawn stores have always provided quick options for people who have encountered emergencies. They have become important parts of society because of the helping hand that they have to offer, something that is not usually given by banks or any other lending company. If you are in need of immediate money for an emergency, we suggest going to a pawn store near you and get the best deal out of your valuables.