One of the main reasons why people go to pawn shops is to get money in a quick and easy manner. By pawning a personal possession such as jewelry or electronic gadgets, a customer can receive money from the shop.
Pawn shops usually have other services which may appeal to other kinds of customers such as buyers of unclaimed collaterals.
If you want to learn more about pawn shops, here is a quick overview of how pawn shops work:
Securing a quick loan from a pawn shop
The core business of pawn shops is money-lending.
First, a customer brings a personal item which will act as a collateral for the loan. Usually, the items being pawned are valuable items such as jewelry, accessories, and even gadgets. The pawnbroker will assess the value of the item and will determine the amount of money that can be lent to the customer. The biggest difference between pawning vs selling is that pawned items are generally expected to be reclaimed.
As you get the money from the pawnbroker, you will also get a pawn note or ticket which states that you have received the money as a loan with your personal item as the collateral, and you agreed to pay back the loan plus the interest within the agreed period of time.
One can say that a pawn shop is like a bank when it comes to money-lending activities. However, unlike banks, pawn shops typically do not require credit and background checks. An agreement between the customer and pawnbroker will suffice. Besides, there is a collateral in the transaction.
Pawning is also easier in terms of process. You just need to bring the item, fill-out some forms, get the ticket, go home with the money, pay back the money after some time, and reclaim your item. The simplicity of the process makes it a better option to secure money.
Paying your obligations for a pawn shop
Pawn shops can be flexible when it comes to payment terms. You can pay back your loan within a month or two, or depending on your agreement with the pawnbroker. You will also pay the interest which will be on top of the amount you received. Remember, you can only reclaim your personal item if you pay your obligations.
Purchase of Unclaimed Pawned Items
While some customers unintentionally fail to pay back the loan and corresponding interest, there are others who really plan to leave their items with the shop with no plans to reclaim them, essentially selling their personal property to the pawn shop.
Whether intentional or unintentional, an item that has been placed as collateral can be sold by the pawn shop later on, especially after demanding payment.
Selling collateralized items is a way to recover the losses from non-paying borrowers and is well within the rights of pawn shops. This happens quite regularly to a point that selling of unclaimed merchandise has become another source of income of pawnshops aside from just interest income.
Pawn shops ensure that the collaterals from their customers are well-taken care of. This is to maintain the quality of the items until they are reclaimed. If they become unclaimed and demands for payment remain unmet after several attempts, then they are then sold at prices that should be relatively higher than the loan amount. So sometimes, you may find quality products at bargain prices through pawn shops.
Pawning as an alternative lender
Pawn shop NYC offer you access to a loan where you can quickly get money while at the same time giving you the ability to recover the item you’re using as collateral to the loan once you have the financial capacity to do so.
So if you don’t plan to permanently let go of certain possessions, but you are in need of a quick loan and that you are confident that you can repay immediately, while not wanting to undergo the hassle of applying for a loan in a bank, then pawning is a great option that you should consider.