In this episode of
Money Creation Explained we are going to cover What are Pawn
Shop Loans?
There are over 9,250 Pawn Shops in the US and they serve
customers from all walks of life. Many people use Pawn Shops
to sell their valuables when they are in need of quick cash.
Pawn shops then resell those items to others in their store
and online. Pawn Shops also offer cash loans for valuables
when the person does not want to sell but rather only wants
a loan.
For example, you bring in an item of value to the pawnshop
and it is worth $1,000. The pawnbroker offers you a loan
that is typically 25% of its resale value ($250) with a
financing fee of usually between 10% - 25% each month (which
translates to around 200% APR). You usually have 1- 3 months
to pay back the loan depending on that particular Pawn Shop.
If you do not repay the loan on time, the Pawn Shop can then
sell the item for its full value and you will not get
reimbursed if your item sold for more than the loan amount.
The Pros include fast cash, and no credit report
requirements or consequences. The Cons include expensive
fees, low loan amounts, possibly losing your item, and no
credit benefits.
An alternative solution would be
Secure Loans which is a service offered by IOU Notes. It
allows users to leverage their own funds to obtain small
loans for personal and business use as needed and never pay
more than 5% interest per year on those funds. Using our
service a user can have a dependable emergency loan option,
help build or rebuild their credit, budget their money
better, and stop paying high interest fees from other loans.
This service was created because of the need for affordable
small loans.
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