Mostly, small loans are for emergencies and other matters. It’s so heartbreaking to visit your bank when you need an emergency loan only to be declined due to a poor credit rating. This is where pawn shops loans come in. You can use your jewelry, equipment, or tools as collateral. Also, a pawn shop loan will save you time for paperwork, and in case of default, no one will know your circumstances.
You Can Get More Than One Loan
It’s not easy to get more than one loan from other financial institutions. This may inconvenience you in case of an emergency. But for pawn shops loans, as long as you have collateral, you can take a loan at any time before repaying the previous. Other lenders aren’t that flexible. They expect you to clear and apply for another loan.
No Credit Checks
Almost every financial institution checks the credit score before giving out loans. If you have a poor score, you will get less money or fail to secure a loan. Pawnshops do not check your credit score. You’ll get money worth your collateral.
Banks and other organizations do not disburse loans quickly. The paperwork and interrogations take days or even weeks before loan approval. In addition, your guarantors also waste time during the process. Pawn shops require you to sign a loan agreement and get the money.
Collateral Items Are Stored Securely
Collateral items in a pawn shop are stored safely, maintaining their value until you pick them. A pawnbroker cannot exchange, break or lose the item. You can get a refund or report the case to the police if that happens.
No Impact On Credit Score
Pawn shops do not check the credit score, so late payments and defaulting will not affect your ratings. On the other hand, defaulting on a bank loan will affect your credit performance. This means you cannot get a loan in the future.
It’s not easy to get a guarantor when taking loans due to trust issues. Those close to you may have the requirements of a guarantor. Some people decline to guarantee others due to the tedious process. In pawn shops, you don’t need to inform anyone. You will just carry your collateral and go back home with money.
If You Default On The Loan, Nobody Will know
If you default on a bank or microfinance loan, you will be listed as a defaulter, and you can’t get a loan from another financial institution. In addition, your property and the guarantor’s will be auctioned. This subjects the borrower to financial crisis and mental torture. However, if you fail to pay your pawn loan, the shop broker will possess the item, and that all! Your loan will be cleared without drama.
Saves You Time
Pawn shops lend money quickly, thus saving you time. With other loaners, the waiting time is extended, and the guarantors also spend a lot of time queuing to sign the documents.
Pawn shops process the loan instantly after reaching an agreement. This means you can receive your loan within an hour or less.
You Incur Interest Per Borrowed Period
Pawn shops charge interest monthly. The shorter time you take to repay your loan, the lesser the interest. The interest will pile up if you pay the loan for a long time, although the contract limits the repayment period. Other loaners have fixed interests or reduced balances.
You cannot predict tomorrow. You may be well today, but an unexpected occurrence can force you to take a loan. Pawn shops will save you because their loans are instant, no guarantors, less paperwork, less interest, and no credit checks. However, look for a reliable and trustworthy broker to avoid losing your items.