Pawnshops have recently gained so much popularity when it comes to the money lending sector. Due to this, many pawnshops have been opened to offer this service to the public. Some of the factors that have made pawn shops so popular include; it is easy and fast to obtain loans from pawnshops, low-interest rates, and no great consequences incurred if you are unable to pay the loan.
- Getting the loan.
Firstly, for you to acquire a loan from a pawnshops, you must have some leverage. Preferably, you can choose to give jewelry, musical instruments, firearms, or any other valuable item. After you get the item you want to take to the pawnshop, you can now approach the pawnbroker who will verify how much money the item you offer is capable of acquiring. In most cases, the pawnbroker is ready to give a third of what the item costs.
To make sure that the item you bring is not stolen, the pawnbroker is allowed to ask questions about the item and also examine its condition. Furthermore, you may be required to show your national identification card or any other official document. After the pawnbroker verifies that the item is valuable and genuine, then you can discuss the amount you want to be given while considering the range in which the pawnbroker gives you.
When everything is settled, you will receive the agreed loan and also be given a pawn ticket. In this ticket, details of your item or pawn are indicated, the expiry date of the ticket given, and the fees involved with the loan. In short, this ticket holds the terms of the loan. Therefore, this ticket should be safely kept until the agreed time when you are supposed to retrieve your item by paying the loan and the interest accumulated.
- Interest rates.
According to research, the interest rates given by pawnshops all over the globe range from 4% to 25% per month. However, these interest rates have been declining as a result of the many pawn shops that are now available. These interest rates are relatively small compared to those of large lending institutions like banks.
- Loan payment.
The loan given in pawnshops can be paid in various ways. You can pay your loan monthly to renew your pawn ticket, pay the full amount plus the interest and retrieve your item or you can fail to return the loan and lose your item. From well-sourced information, it is clear that only 65% of the people who take loans from pawn shops recover their items.