Pawning is one of the oldest industries, having been around for almost 2,000 years, but many people are still confused by the process. Your local pawnshop near Yorba Linda is here let you know how pawn loans work!
How Does One Receive a Pawn Loan?
In order to receive a pawn loan, the first thing you need is something of value that the pawnshop will accept and take as inventory. When you go to the pawn shop, the pawnbroker will assess your items and determine the value of the item, using their knowledge, databases and the expertise of others in the field. If you accept their offer and agree to all of the terms and conditions of the loan, you will be given cash and will have until the date agreed upon to pay back the loan – plus a little bit of interest – so that you can get your item back.
Interest is based on the principle of the loan, and it is usually between two and twenty-five percent per month, depending on the state and local laws of the store. There may also be some additional fees, but they are very small in comparison to other short-term financing options out there.
The Cost of a Pawn Loan
This differs depending on the state of the shop. Pawn shops are regulated on both a state and local scale, meaning that location really drives how much a loan will cost. Also, certain states can require other fees, such as storage or ticket fees, which will be added to the overall cost of the loan.
Most states’ interest rates range from 5-8%, but it can be as high as 25% depending on the area. With this in mind, a $100 loan will cost an additional $5-8 a month. Using these numbers, a $100 loan made for one month with 8% interest charged will cost $108 plus a few dollars for fees.
At the time of making the loan, pawnbrokers will go over the cost breakdown with you. It’s important to understand the terms of the agreement before you leave the shop!
Credit Scores and Pawn Loans
Credit scores are not taken into consideration when making a pawn loan. Loans through pawn shops, while secure, are non-recourse loans, meaning that if the loan defaults, the shop gets to keep the item given as collateral. Credit does not play a part of this.
Safety and Pawn Loans
Pawn shops today work very closely with law enforcement to ensure that stolen goods stay out of their stores. Shops also work with state and local agencies to ensure that everything is regulated to ensure that each customer is treated fairly and within the bounds of regulation.
Pawnbrokers are very proud of what they do and how they serve their communities in the best way they can, especially when it comes to pawn loans. To learn more about our pawn loans, stop by Imperial Pawnbrokers today!