Pawn shop: what is it?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

In today's financial crisis, many people face the problem of lack of money. Realizing that a certain amount is missing for an urgent purchase, most apply for a bank loan or borrow from friends and acquaintances. But there is another category of people who go to the pawnshop for a loan secured by jewelry or other valuables. They rightly believe that a pawnshop is the best opportunity to quickly get a short-term loan. After all, not everyone has additional sources of income or generous relatives who are able to provide material assistance at the right time.

What is a pawnshop?

Those who do not know what material difficulties are, are unlikely to be able to understand why people go to pawnshops. Of course, if a person urgently needs money and there is no one to borrow it from, you can sell one of the things. But not everyone wants to part with their favorite things, and then people give them as collateral with the possibility of a subsequent redemption.

Pawnshop is a legal commercial institution whose activities are based on mortgage principles. Everything is quite simple here: a person who needs money, in exchange forhe leaves a certain amount as a pledge of his value. At the end of the predetermined terms, the pledgor has the right to redeem his property by paying for it the amount received earlier and the interest accrued during this time. Only personal items can be left as collateral, including precious metals, household appliances, vehicles, electronics and jewelry. Recently, the so-called watch pawnshop has become especially popular, providing an opportunity to profitably pawn or sell luxury Swiss watches.

What do we give and what do we get?

You can get money only for things that are of a certain value. The amount of cash issued by the pawnshop is determined taking into account the real value of the collateral provided. Obviously, the appraised value will be several times lower than the amount you paid when purchasing the leased property. Before you pawn your favorite thing, you need to think it over carefully. After all, if the pledger fails to pay the agreed amount, the institution will have to sell the pledged property, and this is associated with a lot of current expenses. Therefore, you should not naively expect that for your brand new tablet worth $500 you will receive at least $400. In reality, the amount will be much less, and in different pawnshops the estimated value of the same thing can vary significantly.

When returning collateral, the borrower will have to pay not only the previously received amount, but also a certain percentage. Payout terms and ratefor the use of money in different pawnshops can vary greatly, and this must be found out in advance. It is worth noting that the percentage is quite high, therefore, it is beneficial to cooperate with such institutions only in the case of a short-term loan.

Pros and cons of going to a pawnshop

One of the main advantages of going to a pawnshop is the speed of the deal. To receive the required amount, it is enough to have some value and a passport. It takes no more than half an hour to complete the paperwork. The second argument in favor of such cooperation is accessibility and simplicity. This is especially true for people who work without official confirmation of income or who have a bad reputation in banking institutions.

In addition to the above advantages, working with pawnshops has a number of significant disadvantages, one of which is the high interest rate charged for using the loan. However, if we are talking about a short-term loan, then the amount will not be too large. In addition, the tech pawnshop does not issue large loans.

Rights and obligations of the borrower

To use the services of a pawnshop, you need to provide not only collateral, but also a passport. Upon completion of the evaluation procedure, a contract is concluded with the client. The pledgor receives cash and a pledge ticket - a document that allows you to redeem the abandoned thing. It must indicate the address of the pawnshop, by whom and to whom the ticket was issued, a description of the pledged property, the amount received by the client and the terms of itsreturn.

If, after the agreed time, the client does not redeem his item, then a month after the end of the contract, it becomes the property of the institution.

How to get money without being scammed?

Before entering into an agreement, you must make sure that the pawnshop has all the permits. There must be money in the cash register. Their absence should be a reason for refusing to deal with such an institution. An important role is played by the level of work and the atmosphere of the pawnshop. Many modern institutions have payment machines.

In addition, one of the common tricks used by an unscrupulous pawnshop is to increase the interest rate. Therefore, it is very important to read the contract carefully before signing it.