pawn loan

At some point in your life, you may experience a time when you are short on cash. It may be because you just had an emergency with hospital bills, or you are simply out of money before payday.

Short on cash?

However, if you are indeed in need of cash due to an emergency, taking out a loan might be your best chance. However, applying for a loan can be a lengthy process and need a lot of requirements. Taking out a loan from banks and other financial institutions requires checking your credit report. Your loan application can be denied with a bad credit score, which means you are not qualified to take out a loan. If you need to get a quick loan without all the hassle, get a pawn loan.

What is a pawn loan?

A pawn loan is also called a collateral loan. It is based on the value of the item. The process requires you to bring in any item with great value, such as jewelry, luxury bags, and other collectibles with high value. The pawnbroker will check your item and determine its value. Once done, the pawnbroker will give you a loan for an amount up to your item’s appraised value. This means the more expensive your item is, the higher the amount of loan you can get. 

How pawn loans work

Pawnshops will not check your credit score anymore or let you undergo a lengthy application process. Because you bring in collateral, you can take out a pawn loan quickly. The only thing you need to bring apart from the pawned item is your identification card to ensure that you are 18 years old or older. The amount of the loan will depend on the value of the item you pawn. However, you need to take note that taking out a pawn loan is not for free. In exchange for getting the cash right then and there, you are required to pay interest. 

You can also bring in your proof of purchase for the item as some pawnshops contact law enforcement to avoid dealing with stolen items and goods. Typically, you are required to pay back the full amount of the pawn lawn to get back your pawned item. You can pay it within the agreed-upon time; usually, it ranges from 30 days to a few months. The fees and interest of a pawn loan vary by state, so you need to check your state law regarding this. 

If you can’t repay within the original period of payment, you can extend or renew your loan, depending on the laws in your area. In the event that you really can’t repay the loan, the pawnshop will sell your item to get back the amount of money they lend you.  A pawn loan is an attractive option for individuals who can’t qualify for a traditional loan but need quick cash.