When you hear the word pawn, the first thing that strikes on your mind is exchanging something for money. A pawn store is generally a store that offers loans in exchange for personal property as equivalent collateral. So, if you repay the loan in the agreed time frame, the collateral may be repurchased at its initial price along with the interest.
Although, if you are unable to repay the loan amount then the collateral can be liquidated by the pawn shop through a pawnbroker or secondhand dealer through sales to customers.
Who Are Pawnbrokers?
When you approach a pawnbroker you have two choices to make, first is to leave something valuable as security for a loan and secondly, you need to sell the item to the pawnbroker. However, there are many pawnbrokers out there that also offer check cashing services. So, if you are looking for check cashing near you , ensure that you visit pawnbrokers nearby.
If you need more information related pawnbrokers then keep reading this article till the end.
How Do Pawnbrokers Work?
A pawnbroker is a person to whom you hand over the item and he values it for you. They will also give you a ‘pre-contract Credit Information form’ if you are a new customer. After that, you will be given a credit agreement to sign which you need to check carefully before signing.
The agreement is about how long the loan lasts and how much will it cost. After signing the agreement, the pawnbroker will give you a receipt which you need to keep to prove you own the item.
If you want, you can redeem the pawn anytime by simply paying what you owe and get your item back. While if you can’t repay the loan during the redemption period then the pawnbroker has the right to sell your item in order to recover the money. Moreover, there is a 14-day cooling off period within which you have a right to withdraw from the agreement and you just need to pay interest for the period of the credit.
When you pawn something, you can expect to pay a pawnbroker a rate of interest that is more than a high street bank loan but is less than a payday lender. The pawnbroker will quote you monthly or daily interest rate but he should also show you the annual interest rate and APR (annual percentage rate).
Generally, loans can be paid in one payment rather than installments but if you need more time to repay then the pawnbroker might agree to extend the term and draw up a new credit agreement.
Things That You Can Pawn
You can pawn almost anything of value that can be re-sold. However, jewelry is the most popular item to pawn but there are many things that people pawn such as designer handbags, exotic and vintage cars, and collectibles.
Pros of Hiring Pawnbrokers
● If you have a poor credit rating then it is a great idea to borrow it from a pawnbroker rather than another lender.
● Pawnbroking is also a quick process where you will receive your money within the same day.
● Further, a pawnbroker can let you redeem your goods at any time and only charge interest for the period you have borrowed the money.
What Happens If You Can’t Repay the Loan?
In that case, you need to make sure that you know the value of the item before you pawn it. That way, you will have the evidence and you will know if the pawnbroker has sold your thing for less than its worth.
If your pawnbroker has done such thing then you first need to complain in writing. You can use the evidence such as newspaper clippings or written quotes to back up your claim.