23 Mar 7 Things You Should Know Before You Use a Pawnbroker!
7 Things You Should Know Before You Use a Pawnbroker
- So’ What is a Pawnbroker
Pawn-broking, Pawnshop, Pop, Hock, Pledge no matter what you call it, it’s possibly the worlds second oldest profession!! The plain simple truth is that it’s collateral lending.
- How Does Pawn Broking Work – Collateral Lending
Contrary to popular belief, a Pawnbroker isn’t there to steal your stuff. In fact the Pawnbroking Industry around the world is so extensively policed that some large corporations have less regulatory laws in comparison. The Pawnbroker first and foremost, lends money, this is based on collateral and this is the main way the pawnbroker derives income and Just like any other finance when the times come to repay the loan there is interest, commonly called a (Redemption Fee) involved. The Pawnbroker lends money based on a percentage of what he perceives to be the value of what the person brings in.
Even though Pawnbroking loans are short term, there is still legal paperwork to be completed, including in-depth reports on all the collateral received; and sometimes this may be passed onto the police if requested, to avoid stolen items. This naturally translates to a higher interest rate than traditional banks, but Pawnbroking provides a lending venue that is different from the bank, Pawnbrokers meet short term lending that the banks don’t, and is available to a greater segment of the society than banks.
Let’s say you have a piece of jewelry or a luxury item that you would like to use as collateral for a loan with us, you will need to make an appointment to visit our offices. We will examine your item carefully in order to determine its value. Once we examine your item, we will offer you a free no obligation evaluation. This appraisal will give you important information about your item’s characteristics and history. We will then offer you a fair cash loan.
- Are All Pawnbrokers The Same
Good Question!, Traditionally Pawnbrokers were seen to be on every street corner lending $20.00 + on smaller items, where you would walk in with your work boots, television set and Lawnmowers, and walk out with your $20, and this transaction all in full view of the General Public, this type of Pawnbroker still exists, and you can still see them on the High Streets of nearly every town or city in every country, (you may have even seen them on reality television), today however, there are Pawnbrokers who have taken Pawnbroking to a different level, by offering Private & Confidential Services in luxury offices who will gladly lend you anywhere from $1,000 to $1,0000,00 on your Ferrari or Designer Handbag or Rolex, Some pawnbrokers will even visit you at home for convenience!
4 So’ who uses The Services of a Pawnbroker?
Traditionally it used to be low income earners you would generally see in a Pawnshop, people who were on day to day casual work basis, those who needed quick cash to pay that unexpected utility bill until the next pay cheque came through, however since the Global Financial Crisis more and more people from all walks of life are turning to the services of a Pawnbroker especially with the banks tightening lending criteria and also not lending short term i.e.( 1 days -3 months), The middle and upper classes are not exempt from this with more and more using a Pawnbrokers services, especially the small business sector that need that quick cash flow for a month or two for the Payroll or that Tax bill that they haven’t catered for, until that big receivables cheque arrives.
An example of this is The Business owner who recently sold the Business and had not accounted for the last GST, therefore needed $3500 for a few days until the sale went through.
- How Much Can I Get?
This very much depends on the collateral you are using, since the pawnbroker does not require credit, employment or reference checks, he has to rely on what he could sell the collateral for in the event a customer doesn’t redeem his loan ticket at the end of the loan period, which could be three to six months , let’s say you’re using a piece of Jewellery or a luxury item, the Pawnbroker would offer you a percentage of what its market value would be, so if you didn’t come back to redeem it, he would be able to on sell and recoup his money.
- “market value So what is market value”?
- Not all costs are created equal. When you buy a piece of Jewellery from a high street Jeweller, or a car from the Mercedes dealer, you’re paying the retail price. If you decide to sell that ring or that car today, you’ll get the market value not the “replacement value.” The difference is what’s called “depreciation” – and it covers the mark-up the dealer has, their rent and overheads and that nice espresso they give you. The relationship between market value and the retail cost varies by item; in the case of Jewellery, you can figure that anywhere from 30% to 60% of the retail price walks out the door with you.
- So’ What Do Pawnbrokers Charge?
This is a difficult one to answer, as not all Pawnbrokers are the same when it comes to charges, some charge a flat interest rate for the full term of the loan, some charge increasing interest monthly, some may charge storage fees and insurance, some won’t allow you to make partial payments and some will. Some Pawnbrokers have a low interest rate for the first month, then higher rate for the second and third, this gives the customer incentive to repay in that first month and there are some Pawnbrokers who charge a weekly rate.
Pawnbroker loan contracts are for three months, most Pawnbrokers will allow you to extend if required, however, you can redeem your item at any time without penalty.
So there you have it! 7 things you need to know before using a Pawnbroker, brought to you by ‘The Pawnbroker”