Updated on November 26, 2020
Updated on November 26, 2020
Pawnshops are establishments that lend money while holding onto collateral, which they sell to recover their money if the borrower fails to pay the loan plus interest in a given duration. These shops accept items like computers, jewelry, television sets, watches, and musical instruments as collateral. Pawnshops lend money to people who need quick cash or those who cannot access loans from institutions such as banks because of their low credit rating. Owners of these shops require identification before approving your loan to prevent pawning off stolen items. State laws govern the interest charged by these shops; it usually ranges between 8% and 25%. However, the stores charge an additional cost for storage, cleaning, maintenance, and repair.
Even though these shops’ primary income source is loaning services, they offer other auxiliary services such as retailing of used goods, appraising items for purchase, money transfer services, and cellphone activation. The goods they retail are those sold to them or the goods held because of loan payment failure. These establishments serve as excellent retail places because they offer a wide range of items, including antiques and vintage products, at subsidized prices. Some pawnshops serve as shipping locations for courier companies such as UPS and FedEx. The auxiliary services not only allow them to earn more income but also to provide vital services to people residing near these establishments.
There are many benefits you received from the services of pawnshops. Given that they lend money without credit checks, they enable households and small businesses in need of urgent funds to access it. You can access these funds quickly as long as your collateral is in good condition, agreed to the terms of the contract, and completed the necessary documents. The pawnshop agreements require that you pay interest for the loan period only. If you pay your loan plus interest on time, you will pay interest for the period you borrowed only. Failure to pay the loan on time does not affect your credit rating; the only downside is that the pawnshop owner will sell your property to recover their expenses. Furthermore, pawnshops allow their clients access to multiple loans as long as they have collateral for these loans and agree to settle their debts within a specific period.
Traditionally pawn shops have been associated with low credit rating individuals seeking to pay urgent bills, but recently a new trend has developed. Affluent people who are seeking to seize emerging business opportunities are pawning their collectibles, such as Rolex watches and paintings, to secure quick funding for these opportunities. These new customers in the pawnshop industry have contributed to the growth of the sector. Consequently, the investments they make using the loans from pawn shops have contributed to developing the economy by creating new ventures and creating employment opportunities pawn shop near me .