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Pawnbrokers will lend money quickly without credit checks, but they will usually charge higher rates of interest. If you’ve decided to raise a little extra cash through a pawnbroker, then you need to consider your options carefully. Take a look at our guide to borrowing money through a pawnbroker.
What are Pawnbrokers?
Pawnbrokers are lenders who secure the loan against an item you own. The item (or ‘pawn’) is valued by the pawnbroker, and they’ll agree to give you a certain amount based upon this. You should be given details of the agreement (which you’ll sign), such as the period of time you have in which to pay back the loan, which can range from seven months to 30 days. You’ll be given a receipt, which you must keep in order to prove that you own the item.
When you’ve repaid the loan, you’ll get your item back. You can extend the loan by paying the interest and repawning the item.
How Does It Work?
The rate of interest offered by pawnbrokers is often more than a high street bank loan, but is a lot less than a payday lender. You may be quoted a monthly interest rate, but you must also be shown an annual percentage rate (APR) too. Pawnbrokers are competitive too, so shop around for the cheapest ones. Some have been known to offer 85% APR, but they can be found cheaper, such as H & T Pawnbrokers who offer a competitive rate.
What Can You Pawn?
You can pawn anything that can be resold, including jewellery, TVs and more. The pawnbroker will likely offer you a cheap price for your items, but don’t be afraid to negotiate. Make sure that your item is clean, that it looks good and it works, to get the best price for it.
- There are no credit checks with a pawn loan, so even if you have a terrible credit rating you can still borrow.
- It’s quick, as you’ll usually get your money the day you pawn your item.
- You’ll be able to get your goods back at any time
- They’ll only charge interest for the period you borrowed and no more.
- You can often get cheaper interest rates elsewhere, with a homeowner loan for instance.
- You can only borrow a percentage of the value of the item you’re pawning.
- You lose the item if you don’t collect it or default on your loan, and if they sell your item and it doesn’t cover your debt, you have to repay the remainder.