Every now and then you get stuck in a bind and need to generate money fast. While banks can help you out, the paperwork needed can be vigorous for many people. With pawn shops, the hustle is greatly reduced. The article gives a look at what they entail.
When in need of money and you want to avoid paperwork then this is the place for you. You do not have to worry about your credit, as long as collateral is present you are good to go. On top of that, defaulting on payment does not hurt your credit too.
What they are:
A Pawn Shop is a business that offers loans in exchange for valuable property. The owner who is referred to as a pawnbroker remains in possession of the commodity till the borrower pays or fails to. The valuable properties include jewelry, gold, watches just to name a few.
What they offer:
The key thing is that Pawn Shops offer loans based on the value of your collateral. You go to the Pawn Shop with the item, if the broker accepts, a fraction of the property’s value is offered as a loan.
Most Pawn Brokers avoid sales outright as they are not as profitable as loans.
How they help:
Pawn Shops offer a quick solution for individuals to get cash. There are numerous cases where you need cash:
- for small businesses where the credit is low thus acquiring bank loans is hectic. Pawn Shops do not check on the credit level just the commodity the borrower can produce. They believe the commodity will cover.
- Emergencies like hospital bills and jail bail
However, by law the Pawn Broker has to confirm if the commodity is legally yours. They will not offer a loan to a commodity that does not belong to you. On top of that, the individual is legally obligated to produce an ID.
What are the Pros:
The added advantage you get by choosing to go with the option of a Pawn Shop are as follows:
- Avoid the debt associated with short term loans: Short term loans from banks usually have a higher interest rate as compared to pawn shops. This makes it unappealing to someone who needs cash quick.
- No background check: Your commodity is all the credit needed. If you default, the goods will be sold.
- Requires Few skills: As a small business owner, all you need to do is appraise the value of the merchandise.
What are the Cons:
- Interest rates vary from shop to shop and are usually high: In a case of 8% per month, it may seem small but it is actually high.
- Goods exchanged are of small value: They offer small returns which may be a hindrance for startup development.
Before proceeding with any Pawn Shop always make sure to consider all your options usa pawn and jewelry.net.