Pawnshops or pawnbrokers are places of business where individuals can receive short term loans on valuable items. Learn some of the best tips on using a pawnshop.
Pawnshops or pawnbrokers are places of business where individuals can receive short term loans on valuable items. It is also a place where many people shop to find bargains on these same items! When economic times get hard many people must resort to using a pawnshop to cover shortfalls in cash flow. If you have found yourself with too much month left at the end of the money a pawnshop could help you get through the rough patch, however there are a few things you should know.
Value
Pawnshops charge interest on their short term loans and this percentage may vary greatly depending on where you live. The goal of a pawnbroker is to either get their money back plus interest or be able to sell your item (should you default) at a profit. This means you are not going to receive full value for your item, in fact, you will get half or less of what the pawnshop owner believes they could sell the item for. Of course, this too can vary depending on what you have to pawn, where you live and how knowledgeable the broker is.
Loans vs. Sales
In some cases, you would be better off selling your item, rather than pawning. This is particularly true if you need a larger sum of money and you have a hot item. Perhaps you have the latest gaming platform or in demand cell phone. Pawnbrokers will usually give you a bit more money for an item they are buying, since they will not have to wait to re-sell and make a profit.
Loan Terms
Before you relinquish your item, you need to fully understand the terms of your loan. Generally, you will have 30-days to redeem your item before it will be placed out on the floor for sale. There are pawnbrokers who will allow you to pay at least the interest on your loan each month, but this is at the discretion of the broker.
Issues
As you probably already know, the United States is still in a bit of economic turmoil, people all across the country are struggling to stay afloat. This can change the game for a pawnbroker:
• More people are pawning/ selling
• Fewer people are buying/ redeeming
• People are spending less on luxury items and looking for useful ones instead
With this type of dynamic you may find your pawnshop is less interested in gaming consoles and laptops and more interested in riding lawn mowers (depending on the season), vehicles and household appliances. Shop owners may also have less money overall to loan, which will drive down the value they place on many items.
One other thing you should be aware of, when it comes to pawning your items is the security of the establishment. Pawnshops are prime targets for break ins and hold ups! Talk to your broker about their insurance and security before pawning valuable items.
Conclusion
Pawnshops provide a valuable service especially in tough economic times provided you understand the process and the risks. Pawning is somewhat like gambling; never pawn anything you cannot afford to lose, as you never know when an unexpected financial crisis will prevent you from redeeming the item.
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