Pawnshop Loans: Are They Good for You?

More and more people may be turning to pawnshop loans for extra cash to fill in the long void between paychecks. A pawnshop loan may be given when a person brings in an item of value that the pawnshop feels it can sell for equal or greater value. The item is collateral for the loan.

The person who receives the loan will usually have 30 days to buy back their item from the pawnshop otherwise it will be put up for sale. If the person doesn’t make it back at the end of 30 days and the item goes up for sale the item will typically be sold for a greater value than the loan.

If the loan recipient comes in after the 30 days and wants to buy back their item they may do so but they will have to pay the mark up. If the item has already been sold it is gone and lost to the former owner.

Before taking out a pawnshop loan on something of value there are a few things you may want to consider.

1} Is the item being taken in for a pawnshop loan a family heirloom or something you treasure?

2} Is the item something you would be devastated to lose?

3} Are you going to be able to pay the loan back at the end of 30 days? Is the loan doable?

If you take a treasured heirloom or something you would hate to lose into a pawnshop as collateral for a pawnshop loan be prepared for the unexpected. Something may happen that causes you to be unable to buy back your item at the end of the 30 days. An unforeseen circumstance such as an accident, an illness, a death in the family and auto repair.

If nothing unexpected happens would you be able to buy back the item you pawned? Are you allowing for the fluctuations in monthly bills like electricity, gas and water? If not bills may become an unexpected if they have risen in price. Factoring in when you get paid can hurt the timeline, the 30 days, for pulling in enough money to buy your item out of pawn. Remember that after the 30 days the item will go up for sale and you will either lose it forever or the price will increase for you to be able to buy it back.

An item taken to a pawnshop doesn’t have to be for a pawnshop loan. It may be something of value that you don’t want and want to sell. Be sure and let the pawnshop people know whether you want to sell the item or you want a pawnshop loan. It may make a difference in the amount of money you receive. You may receive more money for the item if you sell it outright. A pawnshop won’t give you a pawnshop loan or buy outright everything you feel may be of value.