If you need fast cash, but don’t have the best credit, a pawn shop lawn could be an option worth exploring. 

Taking out a loan is a major financial decision that should be made with utmost consideration. Here is a brief overview of pawn shop loans and how they work. 

What is a Pawn Shop Loan? 

A pawn shop loan is a short-term agreement that allows you to get instant cash in exchange for a valuable object. The pawn shop holds your item as collateral for a specific period while you make arrangements to pay back the loan.  

How Pawn Shop Loan Works

The regulations of a pawn shop, such as the interest rates and the amount of time to give back the loan, vary from one state to another. Regardless, the process of obtaining a loan remains the same. Here are the five easy steps for getting a loan:

Step 1: Decide Which Item You Want to Pawn

The first step is to shortlist items that pawn shops may find valuable. Some of the most common items that people pawn are:

  • Jewelry
  • Electronics
  • Musical instruments
  • Video game consoles
  • Sports equipment

Check the market value of your item and have an estimate in mind before you head to the pawn shop. 

Step 2: Bring Your Item

There are no credit check requirements with pawn shop loans. All you need is your government-issued identification card. The age requirements vary from state to state, however the minimum age is 18. 

Step 3: Evaluation of Your Item 

Once you bring your item, the pawnbroker will evaluate its value by assessing its quality and uniqueness. Keep in mind that you’ll be offered 25% to 60% of the resale value. The average maximum loan amount is $150 with a 30-day repayment window. 

Step 4: Receiving Loan

If you agree to the loan amount offered by the pawnbroker, you’ll get cash almost immediately. In addition, you’ll be given a pawn ticket, which is necessary to retrieve your item.

Step 4: Understand the Interest Rates

Every pawnshop has its repayment agreement, with varying interest rates. It is critical to understand these conditions before you take out a loan. Interest rates are relatively higher, ranging from 5% to 25% depending upon the value of your item and the duration of your loan. 

Step 5: Reclaim Your Item

The only way to reclaim your item is to pay off the full amount of your loan in addition to the interest payment. Many pawnshops offer extensions if the customer fails to pay the full amount. However, in such a situation, the interest rate might go up. After a certain period, the shop will put your item on sale. There will be no legal action if you fail to pay off a loan. The pawn shop will simply sell your item to reimburse their loss. 

Choosing a Pawn shop

Despite having similar rules and regulations, the reputation and professionalism of a pawnshop can significantly impact your experience. Choose a pawn shop that offers transparent terms and conditions and low interest rates. Above all, prioritize your financial well-being.