Question: What exactly is a pawn shop?
Answer: A pawn shop is a business that offers loans to individuals in exchange for personal property which they use as collateral. Once the loan is repaid in full the individual gets their personal property back. If the lawn is not paid on time, the items are liquidated so that the pawn shop gets its money back.
Question: How do pawn shops work?
Answer: Pawn shops work by a customer bringing in valuable personal items such as watches, jewelry, television sets among others as collateral. The pawn brokers then lend the money to the client depending on the value of the item. Once the money is fully paid within the stipulated duration, the client gets back their items.
Question: Advantages of a pawn loan over going to the bank?
Answer: Pawn loans are usually very fast, easy and convenient. All one has to do is bring in their valuable items, leave them as collateral and within a matter of minutes they have cash. Pawn brokers do not conduct credit checks, therefore if you have poor credit the bank might turn you down but the pawn shop will not. Most pawn shops will give you a grace period before you can start paying back the money. If you are low on cash you can take advantage of the grace period. There is also the option of extending the loan period rather than defaulting on the loan.
Question: If I cannot repay the loan, does it affect my credit?
Answer: In these hard financial times, it is reasonable to worry about not being able to repay the loan. With your local pawn shop if you cannot repay the loan or you do not wish to repay the loan, the collateral item is simply put up for sale. They do not report it to the credit agencies. Actually, you can continue to bring in items of value and get cash even after defaulting on the original loan.
Questions: Why should I but at a local pawn shops rather than a retail store?
Answer: Most of the items being sold at a pawn shop are previously owned therefore they come at a much lower price compared to the retail shops. Local pawn shops also refurbish jewelry and give guarantee so you are sure you are buying a genuine item. Before accepting items they also conduct searches with the local police department just to make sure that the items are not stolen.
Question: Are my valuable items safe in the pawn shop?
Answer: After leaving items at the pawn shop, it is the duty of the pawn broker to keep them safe. Most pawn shops have a state of the art security system to ensure all items are safe.