Pawning is often seen as a last resort for those in need of quick cash. Surprisingly, however, it can be a better option than traditional forms of borrowing like payday loans, credit cards, and over-drafting bank accounts. All of these may come with hidden fees and conditions many are unaware of until it’s too late. This is why pawning merchandise at pawnshops is better than other ways of obtaining money. Pawning is straightforward and easy to understand. This is why people have used pawn shops for thousands of years!
Let’s take a look at pawn shops and see why they’re better than other methods of obtaining fast cash:
1. Cash in minutes
If not wanting to part with your old merchandise forever but still want fast cash, consider a pawn loan that is funded the same day you apply for it. Simply bring in your item of value, pawn it, pay off the pawn loan (plus any interest and fees), and then get your item back! Pawn shops can lend you a considerable amount of money (depending on the item) in a quick amount of time.
Not to mention, it’s almost impossible to obtain a small loan from other institutions. For example, you generally cannot go to a bank and receive a small dollar loan; loans are typically for big purchases like a house, car, or business. Pawn shops offer cash solutions that other businesses often cannot. The best part is that there’s no waiting around to get your money - EZPAWN can give you cash in as little as fifteen minutes.
2. Lower Interest Rates
Pawn shops typically charge much lower interest rates than payday lenders or credit card companies1. This can save you hundreds or even thousands of dollars in the long run.
3. No Credit Check Required
Pawning does not require a credit check, making it a great option for people who don’t want their credit score affected. This is one of many reasons customers choose pawn shops over other forms of lending. If a customer doesn’t pay off the pawn, then the pawn shop simply keeps the item instead of the customer going into further debt. Lastly, you do not need a co-signer, the transaction is very fast, and you can walk out with cash within minutes!
4. No Collections
That’s right! When you pawn an item at EZPAWN but don’t make the scheduled payments, your credit will not be impacted. Your account is not sent to collections because a pawn loan is a secured loan – meaning you obtain funds by providing collateral for it. You must repay this short-term loan in full, plus interest and fees, in order to get your item(s) back. To restate, if no payments are made, you forfeit the item, and the pawn shop is now able to sell it to recoup the pawn (loan) given to you. And that’s the end of the transaction; any unpaid pawn loans are not reported to collections. This is one more reason why pawn loans are ideal when needing cash!
5. Emergencies
Pawning can be an especially useful option prior to tax season. If you are expecting a refund, but need cash immediately, you can pawn items to tide you over until your refund arrives.
Maybe you’ve got bills to pay or an unforeseen expense, like fixing your car or house. You can pawn something of value and then pay off the pawn loan prior to the due date and get the item back once you receive your tax refund and use it pay off the outstanding balance.
6. Flexibility
If debating whether to get a pawn shop loan or a payday loan, you might want to consider if you can pay back the loan. Payday loans are recourse loans, while pawn shop loans are non-recourse loans. In easier to understand terms, if you can’t pay back a pawn shop loan, the collateral you used to get the loan is forfeited to the pawn shop for them to sell. However, if you can’t repay your payday loan, these lenders can come after you personally. According to the IRS, “recourse debt (loans) allows lenders to collect what is owed for the debt even after they've taken collateral (home, credit cards). Lenders have the right to garnish wages or levy accounts in order to collect what is owed”2. So the primary benefit of a pawn shop loan over a payday loan is that the only thing that happens when you can’t pay back your loan is that it’s forfeited. It won’t affect you personally; your credit score, or wages. Nonetheless, it is best practice to fully understand your loan agreement with the pawn shop and to do your best to repay the pawn shop loan.
Overall, pawning is an alternative option to traditional forms of borrowing. There are no credit checks, and you can keep your possessions – once a pawn loan is paid back in full. This makes pawn shops a great source for those in need of cash, but unable to get it from a traditional lender! Visit your nearest EZPAWN today to find out more.
[1] - https://www.incharge.org/debt-relief/how-payday-loans-work/
[2] - https://apps.irs.gov/app/vita/content/36/36_02_020.jsp
