A pawn loan is a non-traditional, short-term loan that leverages the worth of a specific item (such as gold jewelry, silver jewelry, luxury watches, and cars) to gain access to instant cash. The concept of a pawn loan goes back to the Ancient Greek and Roman Empires. They were also quite common in China more than 3000 years ago.
A pawn loan differs from a traditional bank loan in a few major ways. First, a pawn loan utilizes an actual physical object as leverage for the monies loaned. In other words, while a traditional bank loan is based on a number of intangibles including credit score and pure faith that the loan will be paid back by the consumer, a pawnbroker bases their decision on a physical item. When the loan is paid back in full, the pawned item is once again in full possession of its owner.
Second, a pawn loan doesn’t take credit rating/score into consideration. This provides opportunities for those who have recently undergone bankruptcy, home foreclosure, and any other financial disaster.
Third, a pawn loan is granted on the spot, while a traditional bank loan may take much longer to obtain. Also, a pawn lender grants its clients the ability to pay the loan back as soon as possible, without penalty for early repayment. This is ideal for those who are in temporary financial binds and know an influx of cash will be coming as result to a pending job or the close of a business deal.
How to Get a Pawn Loan
Gaining a pawn loan is quite easy. Here is how it works:
- Select a valuable item (gold jewelry, gold bullion, luxury watch, etc.) to be pawned.
- Locate a pawnbroker with an exceptional reputation. Also, it is recommended that one seeks out a specialized broker for a particular type of item being pawned.
- Provide your ID when you arrive at the pawnshop.
- Gain an appraisal from the pawn broker.
- Agree on the loan amount and to the terms of the loan.
- Cash is granted on the spot.
Once approved for the pawn loan, you will then be required to make payments according to the set terms and conditions. The sooner the loan is paid off, the better.
In order to find a reputable pawn loan, experts recommend a quick Internet search. Online pawn shop customer reviews can reveal a lot about a pawn broker. Additionally, those that belong to The Better Business Bureau are a safe bet.