These days, there are numerous pawn brokers through which you can easily get instant cash when you need it. Nonetheless, prior to deciding to loan money through a pawn broker, you should know the advantages and disadvantages before approaching them.
Advantages of Using a Pawn Shop for Borrowing Money
The first clear advantage is that a pawn shop will not carry out any credit checks. This is so because you will be depositing your valuable (item) with them as a security guarantee for the loaned amount.
Secondly, you get the loaned money almost instantly within minutes – on the very day you sign the contract with the pawn shop. So, it is one of the fastest method through which you can get loan money without any type of hassles.
Thirdly, as soon as you want your valuable back, you can get them from the pawn shop by returning the loaned amount with due interest.
The interesting thing is that – the pawn broker will only charge the interest for the period you have borrowed the money – so you don’t have to pay any extra interest in case you decide to repay your loan amount earlier. Typically, other sources from where you get loan, you will have to pay the interest for the agreed term. Thus, you are not able to quickly pay up your loaned money. With the pawn shop, this is not the case.
Now, we can go through the disadvantages of borrowing money from the pawn broker.
The first drawback of using a pawn broker is that they are comparatively expensive source of getting loan. Similar to pay-day loan companies, pawn brokers have the liberty of altering any APR (Annual Percentage Rate) they want on the loans that they give out.
The second thing is that people are not aware of the fact that they can only borrow a certain percentage of the value of their valuable that they deposit with the pawn broker as collateral. Thus, if you want to take loan for a big amount, you have to deposit a collateral that is valued highly (very expensive item) or you have to deposit numerous smaller items to fetch a high loan amount.
The next disadvantage is that – when you fail to repay your loan amount with interest, the pawn shop have the liberty to sell away your item. Certainly, they have to give you some notice about their intention. Anyway, even after selling your valuable, if the pawn shop is not able to cover for the loaned amount, you will be still liable to repay the remaining loan amount.
These are the basic things that you need to know about getting a loan from a pawn broker.
You can learn more on Pawn Shops Sydney or pawnbrokers from Mega Cash.
