Sunday, October 21 2018
Pawn Shops create this illusion that pawning is an easy process to snag cash quickly. Selling an item is an easy process, but the essential concept is much more complicated. When you pawn an item, you are actually taking out a loan against that belonging. The Pawnshop holds the item until you pay off the loan.
What is it exactly? It is just a fast way to borrow money. If you accept a loan, you walk away with the cash and a pawn ticket, which you’ll need to get your item back. Because you have left collateral with the lender, a pawn loan doesn’t require a credit check, bank account or co-signer. You must be 18 or older and show proof of your identity. And pawn shops are in regular contact with law enforcement to avoid dealing in stolen goods, so the shop may require proof of purchase or ownership of the item.
So is it a good idea to get a pawn shop loan in Philadelphia?
Pawnshop loans are great for those who don’t meet the requirements for a conventional loan. Their late fees also cost less compared to utility fees or a credit card payment. Another advantageous to a pawnshop loan is that you get the money quicker without the need for a credit check. Your credit score won’t change either since there are no legal requirements to repay the loan!
Now to the downsides. A small portion of pawn shop loans is actually never repaid. You need more income if you are consistently going through the cycle of borrowing, extending your lawn and then redeeming it. On top of that, the cost is enormous. On average the APR interest rate is at 36%, but if your loan is priced at $100 or more, your APR rate can be incredibly high at around 200%.
If you are looking to get cash quickly, there are plenty of other options to consider if you’re unsure about applying for a pawnshop loan. Check out other alternatives such as Payroll advance, Bill forbearance, selling, or even taking out a personal loan. Pawn shop loans are great for a lot of people. After weighing out the pros and cons, many wills leans towards looking for other options based on the cost and if you cannot pay it back on time.