Put aside any preconceived notions about pawn shops and know that they are a legitimate source for short-term collateral loans, or pawn loans. In other words, customers bring property—anything from jewelry, electronics, musical instruments, tools, firearms, and more—as collateral, and the pawnbroker issues a cash loan. The amount of the loan is based on the value of the collateral item.
When the customer pays the loan back, the pawnbroker returns the collateral item. If the customer defaults, the pawnbroker gets to keep the item, which will then be sold at market value to retail customers. If a customer needs more time to pay back the loan, extensions and renewals can often be negotiated.
Though pawnbrokers specialize in short-term small loans—which are government regulated—they can also offer long-term loans with flexible payback. And because pawnbrokers have the collateral, they assume very little risk, and are able to offer interest rates lower than banks.
Many people prefer to get short-term loans from a pawnbroker rather than a bank, because they are fast, confidential, and don’t require credit checks. There are also no legal consequences if the borrower defaults, as the collateral ensures that the pawnbroker has a means to recover the loan amount. Pawn loans also ensure that a borrower does not overextend his or her credit.
It really is easy. Visit a pawn shop like Loudoun Jewelry on Maple Avenue to see how much.