When you need money right away, there’s simply no faster, easier, more fair way than pawning an item. But if you’ve never pawned something before, you may not know how to go about turning that item into cash. Luckily, we at McBride’s are here to help! Here are three things you must know before pawning an item at your local pawn shop:
1) How Does Pawning for A Loan Work, Exactly?
It might be best to start with the basics! A pawn shop loan is based on collateral. This is an item that you deem to be of some value, that you leave in the care of the pawn shop and their staff, in exchange for some cash. Meanwhile, you gather the funds that are necessary to pay back your loan before an agreed upon date.
More simply: You bring in an item, you walk out with cash based on the value of the item, and you return to pick up your item with enough cash to pay back the loan. Most pawn loans have interest on top of the principal value of the loan, which varies from state to state. Worth noting: The interest on pawn loans is usually much less than that of most common credit cards.
2) What Is The Value Of My Item?
The answer to this question is two-fold. First, as there are many items that a pawnshop will take for collateral, the actual value of each individual item varies wildly, according to not only the type of item, but the condition and demand for it as well.
Secondly, it is very unusual to receive the actual full, appraised dollar amount for your item, as the pawn shop is not buying it from you and needs to consider things such as the temporary storage of the item, or permanent storage and potential consumer demand in the event that you default on the loan. Therefore, the amount you receive will be a portion of the total value, but it’s hard to say exactly how much.
3) What happens if I don’t pay back my loan?
If your loan goes neglected or the terms are otherwise violated, it is almost 100% likely that your item l will now belong to the pawn shop, for them to sell. This is how the pawnshop will make its money back on the loan it gave you, which has been left unpaid.
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