Pawn Loans 101:
A Complete Guide for Dummies
Presented by Chapes-JPL
Hello!
I am Lee Benhayon I will be your instructor for today’s lesson. You can contact me at info@chapesjpl.com
1.
Definition
Learn about pawn loans and how they work.
Pawn Loan Definition WHAT IS A PAWN LOAN?
HOW DOES IT WORK?
A pawn loan is a fast and easy way to
A pawnbroker will require you to
raise cash for unexpected expenses.
temporarily forfeit an item of value to
Unlike mainstream financing, a pawn
secure a loan. The item you forfeit is
loan usually doesn't require a credit
called collateral and it serves as recourse
check or a lengthy loan application.
should you default on your loan. When your loan is paid in full, the pawnbroker will return your collateral back to you.
2.
Comparison Part 1.
Learn about the two most popular loan options.
Pawn Loans vs Bank Loans
NO CREDIT CHECKS!
A pawn loan differs from a bank loan in that it does not require you to go through an extensive credit check. Additionally, if you have bad credit or don't want to have your credit pulled, you can still qualify for a pawn loan.
Pawn Loans vs Bank Loans (cont.)
SHORTER PAYMENT PERIODS.
However, pawn loans often have high interest rates and must be paid back in shorter amounts of time compared to bank loans. They also come with the risk of you losing the items that you put up as collateral.
Pawn Loans vs Bank Loans (cont.) Alternatively, a bank loan does require a credit check with a high enough credit rating for approval. Banks often turn down applicants who do not have a good to fair credit rating. NO COLLATERAL NEEDED.
In most cases, a bank loan will not require you to put up collateral against the amount you borrow. Some additional advantages include having a longer amount of time to make payments and satisfy the debt. You also do not risk losing valuable items or having to buy them back for the price charged by the lender.
3.
Comparison Part 2.
Learn the difference between pawning and selling.
Pawning vs Selling
KEEP YOUR ITEMS.
How can you decide whether to pawn or sell your belongings? If you want to retain ownership of your valuables, you may consider pawning instead of selling them. When you pawn items, you can get them back if you pay off the loan and interest on time.
Pawning vs Selling (cont.) You can also use them again in the future to get another loan if needed. If you sell them, you no longer own them and can no longer use them as collateral for a loan. However, if you do not want the items given back to you or you cannot afford to make payments on a loan, you should consider selling instead of pawning. Selling them outright lets you get the money you need without having to make payments on a loan. Either way, pawnbrokers are open to buying or lending on items that are deemed to be of value.
4.
Applying
Learn how to get a loan from a pawn shop.
How to Get a Pawn Shop Loan
FIND SOMETHING OF VALUE.
To get a pawn loan, you first must offer up something of value that a pawn shop can resell if you default on your loan. Depending on your collateral, the pawnbroker will offer you an amount and lay out the terms for repayment.
How to Get a Pawn Shop Loan (cont.) Brokers will typically offer less than the full value of your item in order to minimize a potential loss. This gives them enough leeway to recoup your loan in the event that you default. APPRAISE YOUR ITEMS.
Next, you should find out how much your items are worth. If you’re pawning jewelry, use this guide to help you appraise jewelry yourself. Once you've completed the appraisal process, be prepared to negotiate up to 60% percent of your item's value. If the pawnbroker offers you significantly less, you should consider getting a pawn shop loan with another dealer. You can select another dealer by doing research online. Look for stores in your area that have the best reviews. Customers who give pawn stores in your city positive ratings might be worth checking out.
How to Get a Pawn Shop Loan (cont.) After you and the pawnbroker reach a fair amount for the loan, you will then be required by law to sign a loan ticket and provide proof of your identity. Both of these steps are required by federal law as pawnbrokers are closely monitored and regulated by the IRS, the U.S. Treasury, and other federal agencies. By law as well, the pawnbroker must find out exactly who you are and where you live. You must show a current government-issued ID like a driver's license or identification card. If the broker suspects that you might be an identity thieve or that you might have stolen the property that you are pawning, he or she must report you to the police.
How to Get a Pawn Shop Loan (cont.) Before you sign the pawn ticket, review it for critical information like: ▣ how much you are borrowing ▣ how much you are paying in interest and fees ▣ when the loan is due ▣ how and when you are expected to make payments If you have any reason to believe you could default on the loan, you should not sign the ticket unless you are prepared to risk losing your collateral. If you fail to pay back the loan, you could lose the items to the pawnbroker who has the right to put them up for sale in the store. If you pay back the loan on time, you must have the belongings returned to you.
Conclusion A loan from a pawn shop can give you the cash you need to pay important financial obligations such as vehicle, medical, housing and student bills. Although pawn shop loans are not suitable for all situations, they presents a unique set of advantages that some people may find appealing. Unlike a traditional bank loan, a pawn loan doesn't require good credit or proof of employment. However, high-interest rates makes up for the lack of financial requirements. All in all, learning how pawn shop loans work can help consumers avoid the pitfalls of borrowing from a pawn shop.
Thanks! Any questions?
Chapes-JPL 3355 Lenox Rd. NE #875, Atlanta, GA 30326 Tel: (404) 504 - 7021 info@chapesjpl.com
References 1. Frequently Asked Questions. (n.d.). Retrieved July 07, 2017, from https://www.nationalpawnbrokers.org/faq/ 2. Pritchard, J. (n.d.). Before You Consider Borrowing Money, Learn Exactly How Loans Work. Retrieved July 07, 2017, from https://www.thebalance.com/how-loans-work315449 3. Benhayon, L. (n.d.). Sell your jewelry in Atlanta Georgia. Retrieved July 07, 2017, from https://chapesjpl.com/sell-your-jewelry/ 4. Lipowitz, S. (2015, April 09). Rules of Trade for Pawn Shops and Pawnbrokers. Retrieved July 07, 2017, from http://consumer-law.lawyers.com/rules-of-trade-forpawn-shops-and-pawnbrokers.html 5. 8 Tricks to Pawn Jewelry Like a Pro (with images) ¡ opinions. (n.d.). Retrieved July 14, 2017, from https://storify.com/opinions/how-to-pawn-jewelry/