We have come across this term pawnshop in movies we have watched or stories that we have read or just passed one as we went about our day to day activities. We might have even been in one! But for most of us, we might not know what exactly goes on in pawnshops or how transactions are done in pawnshops jewelry pawn shops. This article will tell you all you need to know about pawn shops.
What are pawnshops?
A pawn shop is a business that entails giving loans to people in exchange for valuable items that people leave as collateral for the loan. These items include watches, rings, relics, gold, paintings, electronics, musical instruments, or anything that is of significant value. One can get back his or her item back if the finish paying off the loan they took together with the added interest. If a person is unable to pay the loan and interest within the time agreed on, then the pawnbroker is at liberty to sell the valuable item to another person and get the money back.
What do the pawnshops offer?
Pawnshops give loans in exchange for valuable collateral and if the person loaned is unable to pay back the money, they can sell the item pawned to get back the money. The average pawnshop loan is around $150. So pawnshops are not very helpful if you need a lot of money. They should be your go-to only if you need a quick fix. Pawnshops profit off the interest on loans. This is one of the ways pawnshops make money.
Other than loans, pawnshops also deal with the reselling of items in their shops. When the people who are loaned can’t pay, pawnshops sell items at a cheaper price as compared to the market price since the items are not necessarily brand new. The added interest on these items when is also another way that pawnshops generate their profits.
Pawnshops also offer other auxiliary services such as money transfers and the activation of mobile phones but their major source of income is on the interest on loans and items sold.
How do pawn shops help us?
Pawnshops are very helpful if you need quick cash. Unlike banks that require a lot of time for approval and to process your loan request, pawnshops only require collateral and you get the money instantly with the exchange.
Pawnshops don’t require your credit score, whether you have good credit or not, it doesn’t matter. You will still receive their services. Your collateral is enough security for you to receive the loan.
You don’t have to worry about the consequences of paying back the money, if you are unable to pay the only consequence is the sale of the item you gave as collateral. This is good because you won’t have to worry about your credit score being affected.
There is no paperwork! We are all familiar with how tedious paperwork can be. Pawnshops have zero paperwork. All they need is some form of identification; ID card, passport, or driving license and you are good to go.
You can get multiple loans as long as you bring collateral. Some pawnshops though may lack this flexibility and may require you to pay the first loan before giving you another loan.
Pawnshops can prove to be very helpful if you need quick cash. There isn’t too much hassle and you don’t have the worry of paying back taunting you every second. So the next time you need a quick fix and you have that guitar you haven’t used for a hot minute, or that watch that you don’t need but is really good, pawn it!