How Do Pawn Loans Work?

Pawn loans are a loan type that requires collateral. Common things people use as collateral include jewelry, diamonds, watches, etc

You can use just about anything you own as collateral, as long as it’s worth some money. If you’re not sure if the item you have is worth money, research it on your own. The internet offers a lot of ways to find values of just about anything.

So, a pawn loan works by offering you a way to get cash for things you own. This is not a sale of the items you own. Instead, it’s just a short-term loan.


How Do You Get Your Things Back?

When you offer collateral to a pawnshop for a loan, you will get the item back in time as long as you pay off the loan in full along with any necessary fees.

This part of the process is easy. After taking the loan, you work on saving up enough money to repay it in full. When you have the money, you visit the pawnshop one more time.

You give them the money; they give you back your item. The loan is then paid off, and you have your goods back in your possession.


What Should You Know Before Taking The Loan?

An important thing to know is that you will need to make sure you thoroughly read the terms of the loan. The terms will tell you the following types of things:

  • The amount of money you are getting for the item
  • The interest rate you’ll be required to pay during this time
  • The date in which you must repay the loan

Knowing these things will help you create a plan after you borrow the money. This plan will help you pay off the loan in time so that you can get your item back.

The other thing you are probably wondering is if the pawnshop will check your credit. Generally, pawnshops do not check credit which makes this type of loan ideal for anyone with less-than-perfect credit.

Because you are trading an asset for cash, the pawnshop has nothing to lose. If you fail to repay the loan, they can keep your asset and sell it. Voila! They’ve got their money back.


Here Are The Steps To Take

The process of getting a pawn loan is quite simple, too, and I’ll narrow it down to four basic steps:

Figure Out What Item You Want To Sell And Get The Item Ready

Step one is figuring out what item you could offer as your collateral, and you can take a look around your house or garage to see what you have. Remember, you can use just about anything you have. Just make sure it’s worth some money.

Getting the item ready is also important, and this just means cleaning it up to make it look as good as possible. If the item’s dirty, wipe it off. If it’s a little dull, shine it up.

Take The Item To Your Local Pawnshop To Get An Instant Quote

Next, take the item to your local pawnshop. Once there, they will appraise the item and will offer you an instant quote for cash. $150 is the average amount of a pawn loan but you could get more or less than this depending on the item.

Accept The Money The Pawnshop Offers And Leave Your Item There

After you get the quote, you’ll have to make a decision. Do you trade this item for cash so you can get the loan or do you find another way to get the cash you need?

The most important thing to realize at this time is that you are NOT selling the item. You are only trading it for a short time, and you will have the opportunity to get the item back.

If you decide to go through with it, you’ll have to sign some papers and you’ll walk out the door with cash in your pocket.

Return Within The Time Frame You’re Given With Cash In Hand To Pay Off Your Balance

After taking the loan, you’ll want to make sure you go back to the pawnshop within the required amount of time to pay off your loan. As long as you do this and pay the full amount, they’ll give you your item back.

Most pawn loans last for three to four months but yours might be different. Your paperwork will state the date you have to return by, and you’ll want to make sure you stick with this if you want your asset back.

Take The Next Step By Visiting Us Today

Now that you understand the question of how do pawn loans work, you might be ready to take advantage of one. If so, we can help.

If you are in the New York City area, visit us today with the collateral you’d like to use for your loan, and we’ll help you walk out the door with cash in your hand.